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# 1) A stock is currently selling for \$43. In one period, the stock will move up by a factor of 1.26 or down by a factor of 0.59. A call option with a strike price of \$53 is available. If the risk-free

1)

A stock is currently selling for \$43. In one period, the stock will move up by a factor of 1.26 or down by a factor of 0.59. A call option with a strike price of \$53 is available. If the risk-free rate of interest is 2.5 percent for this period, what is the value of the call option? (Round your answer to 2 decimal places. Omit the "\$" sign in your response.)

 Call option \$

2)

A stock is currently priced at \$42 and will move up by a factor or 1.23 or down by a factor of 0.91 each period over each of the next two periods. The risk-free rate of interest is 3 percent. Calculate the value of a put by solving for the value of a call and then using put-call parity. (Round your answer to 2 decimal places. Omit the "\$" sign in your response.)

 Put option \$

3)

What is the value of a call option if the underlying stock price is \$71, the strike price is \$60, the underlying stock volatility is 31 percent, and the risk-free rate is 5.4 percent? Assume the option has 144 days to expiration. (Round your answer to 2 decimal places. Omit the "\$" sign in your response.)

 Call option \$

Jun 09 2021 View more View Less Subscribe To Get Solution