15 Initial stock price. S 0Interest rate.r7 Exercise price. K8 Time to maturity. Ilyea)10 Stock price111215161718 Put option price1924263081838528 Finding ???-1 for the put36371314555720 The put replicating portfolio#1 Solve equations for mun12 Coefficients55583535 Put price 777-1171819 Finding ???-2 for the put5051236Date 078ngUpDownDate 05051 The put replicating portfolio52 Solve equations for min53 Coefficients36???-091mStock pricePut option pricePut price ???-2Put price ???-0Stock pricePut option priceFinding ???-0 for the put8182 The put replicating portfolio83 Solve equations for mn34 Coefficients222-1222-2Stock pricePut option price222-0Date 1222-1???-230%-10%Date 1ConstantConstantConstantTHREE-DATE BINOMIAL OPTION PRICING1006%110M MnDate 2mnDate 2nmBand priceBand priceBand priceBand priceDate 0Date 1WDate 2

Option Market is a Stock Market Strategy. Under which investor will not purchase the shares of the…

Initial stock price. S 0 interest rate.r Exercise price. K Time to matulty. Tiyeam) Stock price Date 0 Put option price Date 0 Up Down ma Finding ???-1 for the put Put price ???-1 The put replicating portfolio Solve equations for mun Coefficients Stock price Put option price ma Finding ???-2 for the put Put price ???-2 Stock price The put replicating portfolio Solve equations formun Coefficients Put price 777-0 Put option price ma Finding 777-0 for the put Stock price Put option price 22.0 The put replicating portfolio Solve equations for m Coefficients Date 1 m.2 30% -10% Date 1 Constant Constant Constant 100 6% 110 M M Date 2 Date 2 m Bond price Bond price Bond price Band price Date 0 Date 1 M Date 2

Initial stock price. S 0 interest rate.r Exercise price. K Time to matulty. Tiyeam) Stock price Date 0 Put option price Date 0 Up Down ma Finding ???-1 for the put Put price ???-1 The put replicating portfolio Solve equations for mun Coefficients Stock price Put option price ma Finding ???-2 for the put Put price ???-2 Stock price The put replicating portfolio Solve equations formun Coefficients Put price 777-0 Put option price ma Finding 777-0 for the put Stock price Put option price 22.0 The put replicating portfolio Solve equations for m Coefficients Date 1 m.2 30% -10% Date 1 Constant Constant Constant 100 6% 110 M M Date 2 Date 2 m Bond price Bond price Bond price Band price Date 0 Date 1 M Date 2

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An investor has the following expectations on the performance of Stock X and Stock Y: Probability Scenario Returns (%) Stock X Stock Y 0.20 Good 50% 14% 0.50 Average 30% 6% 0.30 Bad -10% 6% Estimate the portfolio return with an allocation of 70:30 (X:Y) in the two stocks. Select one: O a. 11.92% ОБ. 14.80% O. 32.00% O d. 17.68% Following Question 18, estimate the correlation coefficient between the two stocks. Select one: O a. 0.63 оъ. 0.46 O c. 0.84 O d. 0.76 Following Question 18 and 19, estimate the portfolio standard deviation with an allocation of 40:60 in these two stocks. Select one: O a. 9.6% о ь. 10.8% O c. 10.2% O d. 9.2%
QUESTION 2. Consider a stock valued So at time t = 0, and taking only two possible values S1 = S, or Si = S1 at time t = 1, with S, < I1. a) Compute the initial portfolio allocation (a, 3) of a portfolio made of a units of stock and $B in cash, hedging the call option with strike price K e [S,,3¡] and claim payoff Si – K if Si = 3ı C = (Si – K)* $0 if S = S1, at time t = 1. b) Show that the risky asset allocation a satisfies the condition a € [0, 1]. c) Compute the Superhedging Risk Measure SRMc' of the claim C = (S1 – K)+.
how much of your capital (what weight) would you invest in stock A to maximize your portfolio's expected return per unit risk (maximize the Sharpe Ratio)?
Assume the stock's future prices of stock A and stock B as following distribution State Future Price Stock A Future price Stock B $10 $7 $8 $9 If the time 1 price of stock A is $6, and the time 1 price of stock B is $5. And C and C2 represents the time 1 price of ciaim on state 1, C, represents the time 1 prices of unit claims on states 1 and 2. Use the information about stock prices and payoffs to • Find the time 1 prices C, and C2. • Find the risk - free rate of return, obtained in this market
A call option on a stock trading at $58 has an exercise price of $47. The call option is _____ Check all that apply A. in the money B. out of the money C. at the money
i need the answer quickly
A stock has a price of $73, which can later be $77 or $69 with equal probabilities. The options with exercise price $77 are valued at $1.53 for the call and $1.73 for the put. a. Calculate the gains/losses/returns for the stock. b. Calculate the gain/losses/returns for a covered call and protective put portfolio.
Assignant. How to use real Dato to draw the Efficient Frontier? Step: Choose 2 Stocks collect Date for 1 year (daily) Prices Colorlate Returns (daily returns) Pt+1 - Pt Pt R 7,41 STEP 2 6 。Comporte the Expected Return for each stock E(R) = Average Return = Σ Ri - • Compte Risk (6;) => √2 (2:-R)2 R mpute the CORR between the 2 stocks Compute Comply for cov) for
Give the return of the stock in which you would most likely invest and show the preferred order of the stocks if you were considering further investment, all other things being equal. Stock Beta Risk-Free Market-Rate CA-K 0.95 5.5% 9% AU-L 1.05 6% 8.5% TT-M 1.10 5% 8%
A. An option is trading at $5.03. If it has a delta of -.56, what would the price of the option be if the underlying increases by $.75? What would the price of the option be if the underlying decreases by $.55? B. What type of option is this and how? C. With a delta of -.56, is this option ITM, ATM or OTM and how?
Required: a-1. If the stock price at option expiration is $143, will you exercise your call? multiple choice 1 Yes No a-2. What is the net profit/loss on your position? (Input the amount as a positive value.) a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) b-1. Would you exercise the call if you had bought the November call with the exercise price $130?multiple choice 2 Yes No b-2. What is the net profit/loss on your position? (Input the amount as a positive value.) b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) c-1. What if you had bought the November put with exercise price $140 instead? Would you exercise the put at a stock price of $140?multiple choice 3 Yes No c-2. What is the rate of return on your position? (Negative value should be indicated by a minus…
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