Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 8, Problem 1E
(a)
To determine
Calculate the salary of the workers in 2015 in respect to the value in 1900.
(b)
To determine
Calculate the salary of a worker in 2015 in respect to the value in 1932.
(c)
To determine
Calculate the value in 2015 in respect to 1940s.
(d)
To determine
Calculate the value of product in 2015 in respect to the value in 1972.
(e)
To determine
The value of a movie ticket in 2015 in respect to the value in 1977.
(f)
To determine
Calculate the value of the good in respect to the value in 1991.
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Students have asked these similar questions
Consider a call option on a stock that does not pay dividends.
The stock price is $100 per share, and the risk-free interest rate is 10%.
The call strike is $100 (at the money).
The stock moves randomly with u=2 and d=0.5.
1. Write the system of equations to replicate the option using A shares and B bonds.
2. Solve the system of equations and determine the number of shares and the number of bonds
needed to replicate the option. Show your answer with 4 decimal places (x.xxxx); do not
round intermediate calculations. This is easy to do in Excel.
A =
B =
3. Use A shares and B bonds from the prior question to calculate the premium on the option.
Again, do not round intermediate calculations and show your answer with 4 decimal places.
Call premium =
Answer these questions using replication or the risk neutral probability. Both methods will
produce the same answer.
Show your work to receive credit.
6. What is the premium of a call with a higher strike.
Show your work to receive credit; do not round intermediate calculations.
S0 = $100, u=2, d=0.5, r=10%, strike=$150
Answer these questions using replication or the risk neutral probability. Both methods will produce the same answer.
Chapter 8 Solutions
Macroeconomics (Fourth Edition)
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