Question

The current price of Natasha Corporation stock is $6.28. In each of the next two​ years,...

The current price of Natasha Corporation stock is $6.28. In each of the next two​ years, this stock price can either go up by $2.50 or go down by $2.00. The stock pays no dividends. The​ one-year risk-free interest rate is 3.2% and will remain constant. Using the Binomial​ Model, calculate the price of a​ two-year call option on Natasha stock with a strike price of $7.00.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

let me know if you have any doubts

PLEASE RATE THUMBS UP IF YOU LIKE THE ANSWER

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The current price of Natasha Corporation stock is $ 5.97 $5.97. In each of the next...
The current price of Natasha Corporation stock is $ 5.97 $5.97. In each of the next two​ years, this stock price can either go up by $ 2.50 $2.50 or go down by $ 2.00 $2.00. The stock pays no dividends. The​ one-year risk-free interest rate is 3.7 % 3.7% and will remain constant. Using the Binomial​ Model, calculate the price of a​ two-year call option on Natasha stock with a strike price of $ 7.00 $7.00. The price of...
The current price of Natasha Corporation stock is $5.17. In each of the next two? years,...
The current price of Natasha Corporation stock is $5.17. In each of the next two? years, this stock price can either go up by $2.50 or go down by $2.00. The stock pays no dividends. The? one-year risk-free interest rate is 4.4% and will remain constant. Using the Binomial? Model, calculate the price of a? two-year put option on Natasha stock with a strike price of $7.00.
The current price of Estelle Corporation stock is $ 21.00 $21.00. In each of the next...
The current price of Estelle Corporation stock is $ 21.00 $21.00. In each of the next two​ years, this stock price will either go up by 20 % 20% or go down by 20 % 20%. The stock pays no dividends. The​ one-year risk-free interest rate is 8.0 % 8.0% and will remain constant. Using the Binomial​ Model, calculate the price of a​ one-year call option on Estelle stock with a strike price of $ 21.00 $21.00. The price of...
The current price of MB Industries stock is $20 per share. In the next year the...
The current price of MB Industries stock is $20 per share. In the next year the stock price will either go up to $24 per share or go down to $16 per share. MB pays no dividends. The one year risk-free rate is 5 percent and will remain constant. Using the one-step binomial pricing model, what is the price of a one-year CALL option on MB stock with a strike price of $20 (out to two decimal places)?
The current price of Rock Pound Corporation stock is $10. In the next year, this stock...
The current price of Rock Pound Corporation stock is $10. In the next year, this stock price can either increase by 20% or decrease by 10% every six months. Rock Pound pays no dividends. The effective semi-annual risk free interest rate is 2%, which will remain constant forever. Using the risk neutral binomial model, calculate the price of a one-year European call option on Rock Pound stock with a strike price of $10
The current price of MB Industries stock is $20 per share. In the next year the...
The current price of MB Industries stock is $20 per share. In the next year the stock price will either go up to $24 per share or go down to $16 per share. MB pays no dividends. The one year risk-free rate is 5 percent and will remain constant. Using the one-step binomial pricing model, what is the price of a one-year PUT option on MB stock with a strike price of $20 (out to two decimal places)?
1- A one-year European call option on Stanley Industries stock with a strike price of $55...
1- A one-year European call option on Stanley Industries stock with a strike price of $55 is currently trading for $75 per share. The stock pays no dividends. A one-year European put option on the stock with a strike price of $55 is currently trading for $100. If the risk-free interest rate is 10 percent per year, then what is the current price on one share of Stanley stock assuming no arbitrage? 2- The current price of MB Industries stock...
The current stock price of firm AAa= $20. It is expected that this firm’s stock price...
The current stock price of firm AAa= $20. It is expected that this firm’s stock price will go up by 20%, or it might go down by 20%. No dividends. The one year risk free rate = 5%. A call option’s strike price is also $20. Using the binomial pricing model , calculate that to set up a risk free portfolio, for each call option, how many stocks (or portion of a stock) is needed. 22. Using the binomial pricing...
a) Given that stock price=£1.15, strike price=£1, T=0.25 (i.e. 3 months), risk free rate=0.10 and ?=0.20...
a) Given that stock price=£1.15, strike price=£1, T=0.25 (i.e. 3 months), risk free rate=0.10 and ?=0.20 calculate the price of a European call. The stock under consideration pays no dividends. Also d1=ln[S/PV(X)]/(sigmaT1/2)+(sigmaT1/2/2) and d2= d1- sigmaT1/2 b) The current price of CDE stock is £6. In each of the next two years, this stock price can either go up by £2.50 or go down by £2.00. The stock pays no dividends. The risk free rate is 3%. Using the binomial...
ABC stock is currently trading at $100. In the next period, the price will either go...
ABC stock is currently trading at $100. In the next period, the price will either go up by 15% or down by 10%. The risk-free rate of interest over the period is 5%. Consider a call and a put option with $100 strike price with one-year maturity. Which of the following statement is false based on one period binomial option pricing model? choices: The synthetic call would include borrowing $48.86 at risk-free rate The synthetic put would include investing $41.62...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT