# Question: Using the data in Table 21 1 compare the price on

Using the data in Table 21.1, compare the price on July 24, 2009, of the following options on JetBlue stock to the price predicted by the Black-Scholes formula. Assume that the standard deviation of JetBlue stock is 65% per year and that the short-term risk-free rate of interest is 1% per year.

a. December 2009 call option with a $5 strike price

b. December 2009 put option with a $6 strike price

c. March 2010 put option with a $7 strikeprice

a. December 2009 call option with a $5 strike price

b. December 2009 put option with a $6 strike price

c. March 2010 put option with a $7 strikeprice

## Answer to relevant Questions

Using the market data in Figure 20.10 and a risk-free rate of 0.25% per annum, calculate the implied volatility of Google stock in September 2012, using the bid price of the 700 January 2014 call option.Using the information in Problem 3, calculate the risk-neutral probabilities. Then use them to price the option.The J. Miles Corp. has 25 million shares outstanding with a share price of $20 per share. Miles also has outstanding zero-coupon debt with a 5-year maturity, a face value of $900 million, and a yield to maturity of 9%. The ...Under the same assumptions as in Section 22.3, suppose your corporation owns an operating electric car dealership, together with one-year options to open five more.a. What is the value and beta of your firm if the expected ...An original silver dollar from the late eighteenth century consists of approximately 24 grams of silver. At a price of $0.19 per gram ($6 per troy ounce), the silver content of the coin is worth about $4.50. Assume that ...Post your question