Option and Risk-free Interest Rate free essay sample

Consider a choice on a non-profit following through on stock when the stock cost is $30, the activity cost is $29, the hazard free financing cost is 5% per annum, the instability is 25% per annum, and the opportunity to development is four months. a. What is the cost of the choice on the off chance that it is an European call? b. What is the cost of the alternative in the event that it is an American call? c. What is the cost of the alternative on the off chance that it is an European put? d. Confirm that putâ€call equality holds. Question 2 Assume that the stock in Question 1is due to go ex-profit in 1. 5 months. The normal profit is 50 pennies. a. What is the cost of the choice on the off chance that it is an European call? b. What is the cost of the alternative on the off chance that it is an European put? c. Utilize the outcomes in the Appendix to this section to decide if there are any conditions under which the alternative is practiced early. We will compose a custom exposition test on Alternative and without risk Interest Rate or on the other hand any comparative subject explicitly for you Don't WasteYour Time Recruit WRITER Just 13.90/page Question 3 What is the cost of an European put choice on a non-profit following through on stock when the stock cost is $69, the strike cost is $70, the hazard free loan cost is 5% per annum, the instability is 35% per annum, and the opportunity to development is a half year? Question 4 A remote cash is right now worth $1. 50. The local and outside hazard free loan costs are 5% and 9%, individually. Ascertain a lower headed for the estimation of a six-month call choice on the cash with a strike cost of $1. 40 in the event that it is (an) European and (b) American. Question 5 Consider a stock file as of now remaining at 250. The profit yield on the file is 4% per annum, and the hazard free rate is 6% per annum. A three-month European call choice on the file with a strike cost of 245 is as of now worth $10. What is the estimation of a three-month put alternative on the record with a strike cost of 245? Question 6 A file as of now remains at 696 and has an unpredictability of 30% per annum. The hazard free pace of intrigue is 7% per annum and the file gives a profit yield of 4% per annum. Compute the estimation of a three-month European put with an activity cost of 700.