Question

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 two-year call option is $ nothing . (Round to the nearest cent.)

Answer #1

Detailed answer is provided in the hand written notes below.

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.

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.

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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 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 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 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)?

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...

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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
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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?
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ABC stock is currently trading at $100. In the next period, the
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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...

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