D5 A stock currently selling for $45 should pay a dividend of $1.50 in 6 months. A 6-month call with a $50 strike price is selling for $2.20. The interest rate is 5% What is the price of a 6-month put option with a $50 strike price?
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| D5 | A stock currently selling for $45 should pay a dividend of $1.50 in 6 months. | ||||
| A 6-month call with a $50 strike price is selling for $2.20. | |||||
| The interest rate is 5% | |||||
| What is the price of a 6-month put option with a $50 strike price? |
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- Binomial Model The current price of a stock is 20. In 1 year, the price will be either 26 or 16. The annual risk-free rate is 5%. Find the price of a call option on the stock that has a strike price of 21 and that expires in 1 year. (Hint: Use daily compounding.)Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and expirations of 6 months. What will be the profit to an investor who buys the call for $4 in the following scenarios for stock prices in 6 months? What will be the profit in each scenario to an investor who buys the put for $6? $40 $45 $50 $55 $60Suppose a stock is priced at $75 at expiriry and the annual interest rate is 8 %. Determine the profit at expirity for the following one-year european call options: A $ 70-strike call with premium $ 9.91 ? A $ 75-strike call with premium $ 6.03 A $ 80-strike call with premium $ 4.64 ? ?
- Assume a stock has a value of $100. The stock is expected to pay a dividend of $2 per share at year-end. An at-the-money European-style put option with one-year maturity sells for $7. If the annual interest rate is 5%, what must be the price of a 1-year at-the-money European call option on the stock?Consider a European call option on a stock with current price $100 and volatility 25%. The stock pays a $1 dividend in 1 month. Assume that the strike price is $100 and the time to expiration is 3 months. The risk free rate is 5%. Calculate the price of the the call option.the current price of a stock is $100. what is the black scholes model price of a six month call option at strike $90, given an interest rate of 5% ? the volatility is 40% a. $17.76 b. $10.00 c. $15.00 d. $5.54
- The current price of a non-dividend paying stock is $30. Use a two-step tree to value a European call option on the stock with a strike price of $32 that expires in 6 months. Each step is 3 months, the risk free rate is 8% per year with continuous compounding. What is the option price when u = 1.1 and d = 0.9? O $1.29 O $1.69 O $1.49 O None of these O $1.89 ◄ Previous Next ▸The current price of a non-dividend-paying stock is $25. Over the next six months it is expected to rise to $30 or fall to $21. An investor buys put options with a strike price of $27. What is the value of each option? The risk-free interest rate is 5% per annum with continuous compounding. Answer to 3dps. Group of answer choices 1.578 2.840 3.018 0.935Today a stock is $100, and a call option on this stock with a year to expiration and a $120 strike price is trading with a $6.06 premium. The risk-free rate is 10%. What is the premium of a put option on the stock with the same strike and expiration? $1.28 $6.06 $7.22 $15.15
- A put option and a call option with an exercise price of $115 and three months to expiration sell for $5.45 and $8.75, respectively. If the risk-free rate is 2.0% per year, compounded continuously, what is the current stock price? $111.13 $121.13 $117.73 $112.40a non‐dividend paying stock is priced at $17.35 today. The current interest rate is 3.0% per annum. A 3‐month put option with an exercise price of $20.00 is available. What is the lower bound of the price of this put option?Consider a stock with a current price of P $27 Suppose that over the next 6 months the stock price will either go up by a factor of 1.41 or down by a factor of 071. Consider a call option on the stock with a strike price of $25 that expires in 6 months. The nsk-free rate is 6%. (1) Using the binomial model, what are the ending values of the stock price? What are the payoffs of the call option? (2) Suppose you write one call option and buy N shares of stock How many shares must you buy to create a portfolo with a riskless payoff Ge, a hedge portfolio)? What is the payoff of the portfolio? 13)What.is the.present.value of the hedge port- Tolot What &the value of phe calt.option? (4) What s a teplieatirg portfolio What is 2otrage?
