# Question: Using the information on Harbin Manufacturing in Problem 19 answer

Using the information on Harbin Manufacturing in Problem 19, answer the following:

a. Using the risk-neutral probabilities, what is the value of a one-year call option on Harbin stock with a strike price of $25?

b. What is the expected return of the call option?

c. Using the risk-neutral probabilities, what is the value of a one-year put option on Harbin stock with a strike price of $25?

d. What is the expected return of the put option?

a. Using the risk-neutral probabilities, what is the value of a one-year call option on Harbin stock with a strike price of $25?

b. What is the expected return of the call option?

c. Using the risk-neutral probabilities, what is the value of a one-year put option on Harbin stock with a strike price of $25?

d. What is the expected return of the put option?

## Answer to relevant Questions

Using the information in Problem 1, calculate the risk-neutral probabilities. Then use them to price the option.26. Consider the March 2010 $5 put option on JetBlue listed in Table 21.1. Assume that the volatility of JetBlue is 65% per year and its beta is 0.85. The short-term risk-free rate of interest is 1% per year.a. What is the ...You are a financial analyst at Global Conglomerate and are considering entering the shoe business. You believe that you have a very narrow window for entering this market. Because of Christmas demand, the time is right today ...You are an analyst working for Goldman Sachs, and you are trying to value the growth potential of a large, established company, Big Industries. Big Industries has a thriving R&D division that has consistently turned out ...Your engineers are developing a new product to launch next year that will require both software and hardware innovations. The software team requests a budget of $5 million and forecasts an 80% chance of success. The hardware ...Post your question