You observe a premium of $5.38 for a call option on Birdwell Enterprises common stock, which is currently selling for $38. The strike price on the call option is $35. The option has four months to maturity. The stock pays no dividends. The current risk-free interest rate is 4.50%. What is the implied volatility of the stock? Note: Round your answer to the nearest whole percent. Implied volatility %
You observe a premium of $5.38 for a call option on Birdwell Enterprises common stock, which is currently selling for $38. The strike price on the call option is $35. The option has four months to maturity. The stock pays no dividends. The current risk-free interest rate is 4.50%. What is the implied volatility of the stock? Note: Round your answer to the nearest whole percent. Implied volatility %
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
Related questions
Question
![You observe a premium of $5.38 for a call option on Birdwell Enterprises common stock, which is currently selling for $38. The strike
price on the call option is $35. The option has four months to maturity. The stock pays no dividends. The current risk-free interest rate
is 4.50%. What is the implied volatility of the stock?
Note: Round your answer to the nearest whole percent.
Implied volatility
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7e3e03f3-be80-4b12-a453-39024ea8ca96%2F2fd13c1e-122b-4fc1-a14a-c7aec25c3fe6%2Fduuni9_processed.png&w=3840&q=75)
Transcribed Image Text:You observe a premium of $5.38 for a call option on Birdwell Enterprises common stock, which is currently selling for $38. The strike
price on the call option is $35. The option has four months to maturity. The stock pays no dividends. The current risk-free interest rate
is 4.50%. What is the implied volatility of the stock?
Note: Round your answer to the nearest whole percent.
Implied volatility
%
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