Suppose a non-dividend paying stock is trading at $175 per share and has a volatility of 45%. What is the fair price of a 9-month European put option with a strike price of $190 per share using 1 binomial period? Assume the risk-free rate is 1%. Round to the nearest $0.01.

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A: Black-Scholes formula (European put option): CPut=Ke-rtN-d2-S0N-d1

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Q: Suppose a non-dividend paying stock is trading at $175 per share and has a volatility of 45%. What…

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A: As per the Black sholes model ,

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Q: Suppose a non-dividend paying stock is trading at $175 per share and has a volatility of 45%. What…

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A:

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A: Honor code: Since you have posted a question with multiple sub-parts, we will solve the first three…

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Q: What is the risk-free rate of return?

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A: Given: Stock price = $28 Strike price = $25 Risk free rate = 8% number of months =4

Q: When the non-dividend paying stock price is $20, the strike price is $20, the risk-free rate is 6%…

A: Stock price = $20Strike price = $20Risk-free rate = 6%Volatility = 30%Time = 3 month

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.