5-2: The Single-Period Binomial Option Pricing Approach Problem
5-7 Binomial Model
The current price of a stock is $14. In 6 months, the price will be either $19 or $11. The annual risk-free rate is 7%. Find the price of a call option on the stock that has a strike price of $12 and that expires in 6 months. (Hint: Use daily compounding.) Round your answer to the nearest cent. Assume a 365-day year. Do not round your intermediate calculations.
Also, please explain the answer.
A capacitor is made from two hollow, coaxial, iron cylinders, one inside the other. The inner cylinder is negatively charged and the outer is positively charged; the magn...May 30 2021
Determine whether the given vector field is conservative, and find the potential if it is. F(x,y,z) = 2yi + 2xj + 25k Select the correct choice below and, if necessary, f...May 06 2021
Suppose your nominal income this year is 5 percent higher than last year. If the inflation rate for the period was 3 percent, thenyour real income was:A. increased by 1.6...Jun 14 2018
Dave currently consumes 10 hot dogs and 6 sodas each week. At his current consumption basket, his marginal utility for hot dogs is 5 and his marginal utility for sodas is...Mar 30 2020
Credit memos are created when a product is returned. Credit memos reduce A/R (accounts receivable) by crediting the account, and it writes off the invoice. This also reco...Aug 13 2020
Question 1 (25 marks) a) A full wave rectifier has 40V peak secondary voltage, 2,000uF capacitor and 1022 load. You may take the line frequency as 50Hz and voltage drop a...Jun 04 2020
Solve 4x2- 20x = -17 algebraically?Apr 21 2020
Variance analysis, working backward. The Hiro Corporation sells two brands of wine glasses: Plain and Chic. Hiro provides the following information for sales in the month...Jul 16 2020
How can an employee take an ethical stand regarding a business decision when his or her superior already has taken a different position?Jun 03 2020
Wilson Company manufactures its product on an assembly line. The firm began production in year one. During the year, work was begun on 45,000 units. The assembly line has...Feb 11 2020