A stock is trading at 211.35 and will pay a dividend of 3.45 in two months. Two- and three- month zero-coupon bonds are trading at 0.9837 and 0.9753 per dollar of face, respectively. Three-month European puts struck on the stock at 216 are trading at 20.2. What's the price of a three-month ATM European call on the stock also struck at 216?
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- A European put on Microsoft shares with an exercise price of $50 and maturity of 3 months is trading at $10. The 3-month interest rate, not annualized, is 0.4%. What is the price of Microsoft stock that makes the put break- even?A stock is worth $50 on december, 1st 2021. This price increases by 4% ou decreases by 4% every 2 months. The flat continuous rate of interest is 5% and the continuous rate of dividend is 2%. a) What is the premium of an American call on this stock with a maturity of 6 months and a strike price of $48? b) What is the premium of a European put on the stock? Maturity and strike price remain unchanged. c) In option pricing theory, what does 'risk neutral' probability mean? What is the probability the European put gets exercised?The risk-free rate is 2.97% and the market risk premium is 9.23%. A stock with a ẞ of 1.79 just paid a dividend of $2.45. The dividend is expected to grow at 22.40% for three years and then grow at 3.56% forever. What is the value of the stock?. Submit Answer format: Currency: Round to: 2 decimal places. Show Hint
- If a certain stock sells for 33.812 dollars on the NYSE, how much will it sell for, in dollars, on the LSE(London stock exchange). Remember that the distance between NYSE and LSE is about 3,460 milesAn NDP (non-dividend-paying) stock is trading at 100. A 1-year at-the-money European call on the stock is trading at 13 and the ly atm European put is trading at 10. Compute the ly forward price of the stock.A 4-month European call option on a stock (with dividend) is currently selling for RM5. The price of the stock is RM64 and the strike price is RM60. The risk-free interest rate is 12% p.a. A dividend of RM0.80 is expected one month from now. Is there any arbitrage opportunities? Show your working. How much is the profit/loss if at maturity the price of the stock is higher than the strike price? How much is the profit/loss if at maturity the price of the stock is lower than the strike price?
- Stock of HLL is currently trading in the market at Rs.220. The price of the stock is expected to go up or down by 15% in the first half year and by 5% in the second half year. The return on the Government security being traded in the market for same maturity is 4% p.a. You are required to calculate the value of a one-year American put option on HLL’s stock with strike price of Rs.2501) Assume that the risk-free rate is 7% per annum (continuous compounding) for all maturities. Compute the three-month forward prices of the following assets: i) A share that will distribute a $8 dividend in 2 months and a $12 dividend in six months. The current spot price of the share is $85. ii) The Swiss franc. The current spot price is 1.4 dollars for 1 Swiss franc and the foreign (i.e., the Swiss) risk-free rate is 6% per annum (continuous compounding).What is the lower bound for the price of a 7-month European call option on a dividend-paying stock when the stock price is $38.3, the strike price is $40, the risk-free interest rate is 1.1% per annum, and the stock is expected to pay a dividend of $2.56 in three months? Report your answer in dollars and cents.
- A stock trading at $47 has a volatility of 30 percent. The continuously compounded risk-free rate is 6 percent. A dividend of $1.4 is expected in 4 months, and no other dividends are expected during the next 12 months. Price a European call written on this stock with an exercise price of $50 and a time to maturity of one year.What is the price of a European call on a non-dividend-paying stock when 3. the stock price is $56, the strike price is $51, the continuously compounded risk-free interest rate is 13% per annum, the volatility is 20% per annum, and the time to expiration is five months?Consider a European call on a stock when there are ex-dividend dates in 5. four months and seven months. The dividend on each ex-dividend date is expected to be $2.50. The current stock price is $50, the exercise price is $51, the volatility is 20% per annum, the continuously compounded risk- free interest rate is 12% per annum, and the time to expiration is nine months. Calculate the price of the call.