Option and Risk-free Interest Rate free essay sample

Consider a choice on a non-profit following through on stock when the stock cost is $30, the activity cost is $29, the hazard free loan cost is 5% per annum, the instability is 25% per annum, and the opportunity to development is four months. a. What is the cost of the alternative in the event that it is an European call? b. What is the cost of the choice on the off chance that it is an American call? c. What is the cost of the alternative on the off chance that it is an European put? d. Confirm that putâ€call equality holds. Question 2 Assume that the stock in Question 1is due to go ex-profit in 1. 5 months. The normal profit is 50 pennies. a. What is the cost of the alternative in the event that it is an European call? b. What is the cost of the alternative in the event that it is an European put? c. Utilize the outcomes in the Appendix to this section to decide if there are any conditions under which the alternative is practiced early. We will compose a custom article test on Alternative and sans risk Interest Rate or on the other hand any comparable point explicitly for you Don't WasteYour Time Recruit WRITER Just 13.90/page Question 3 What is the cost of an European put choice on a non-profit following through on stock when the stock cost is $69, the strike cost is $70, the hazard free loan fee is 5% per annum, the instability is 35% per annum, and the opportunity to development is a half year? Question 4 A remote money is presently worth $1. 50. The local and outside hazard free loan costs are 5% and 9%, separately. Figure a lower destined for the estimation of a six-month call alternative on the money with a strike cost of $1. 40 on the off chance that it is (an) European and (b) American. Question 5 Consider a stock list at present remaining at 250. The profit yield on the list is 4% per annum, and the hazard free rate is 6% per annum. A three-month European call choice on the record with a strike cost of 245 is at present worth $10. What is the estimation of a three-month put choice on the list with a strike cost of 245? Question 6 A file as of now remains at 696 and has an unpredictability of 30% per annum. The hazard free pace of intrigue is 7% per annum and the list gives a profit yield of 4% per annum. Compute the estimation of a three-month European put with an activity cost of 700.