Fill in all the cells labeled ??? in the following spreadsheet: Why is there no additional pricing
Question:
Fill in all the cells labeled ??? in the following spreadsheet: Why is there no additional pricing tree for an American call option?
D E THREE-DATE BINOMIAL OPTION PRICING 1.35 A K 1 2 Up, U 3 Down, D state prices qu 0.95 4 5 Initial stock price 6 Interest rate, R 7 Exercise price 40 1.25 40 9 Stock price 10 11 12 Bond price ??? ??? ??? ??? 40 ??? ??? 13 ??? ??? 14 ??? ??? 15 16 European call option 17 18 European put option ??? ??? 19 20 21 22 ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? 23 24 25 26 27 28 |American put option ??? ??? ??? ??? 29 ??? 30 ???
Step by Step Answer:
ANSWER Cell E5 50 assuming the initial stock price is 50 Cell E9 6750 calculating the stock price at ...View the full answer
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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