Show that the formula for the price of a put option with payoff of PT = max(K
Question:
Show that the formula for the price of a put option with payoff
Transcribed Image Text:
of PT = max(K – ST, 0) at time T is Pt = e-r(T-t) KN (−d₁ + o√Tt) - StN(-d₁), where d₁= = log ()+(r+²) (T-t) o√T-t
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (1 review)
The image shows the BlackScholes formula for the price of a put option The BlackScholes model provides theoretical estimates for the prices of Europea...View the full answer
Answered By
Ashington Waweru
I am a lecturer, research writer and also a qualified financial analyst and accountant. I am qualified and articulate in many disciplines including English, Accounting, Finance, Quantitative spreadsheet analysis, Economics, and Statistics. I am an expert with sixteen years of experience in online industry-related work. I have a master's in business administration and a bachelor’s degree in education, accounting, and economics options.
I am a writer and proofreading expert with sixteen years of experience in online writing, proofreading, and text editing. I have vast knowledge and experience in writing techniques and styles such as APA, ASA, MLA, Chicago, Turabian, IEEE, and many others.
I am also an online blogger and research writer with sixteen years of writing and proofreading articles and reports. I have written many scripts and articles for blogs, and I also specialize in search engine
I have sixteen years of experience in Excel data entry, Excel data analysis, R-studio quantitative analysis, SPSS quantitative analysis, research writing, and proofreading articles and reports. I will deliver the highest quality online and offline Excel, R, SPSS, and other spreadsheet solutions within your operational deadlines. I have also compiled many original Excel quantitative and text spreadsheets which solve client’s problems in my research writing career.
I have extensive enterprise resource planning accounting, financial modeling, financial reporting, and company analysis: customer relationship management, enterprise resource planning, financial accounting projects, and corporate finance.
I am articulate in psychology, engineering, nursing, counseling, project management, accounting, finance, quantitative spreadsheet analysis, statistical and economic analysis, among many other industry fields and academic disciplines. I work to solve problems and provide accurate and credible solutions and research reports in all industries in the global economy.
I have taught and conducted masters and Ph.D. thesis research for specialists in Quantitative finance, Financial Accounting, Actuarial science, Macroeconomics, Microeconomics, Risk Management, Managerial Economics, Engineering Economics, Financial economics, Taxation and many other disciplines including water engineering, psychology, e-commerce, mechanical engineering, leadership and many others.
I have developed many courses on online websites like Teachable and Thinkific. I also developed an accounting reporting automation software project for Utafiti sacco located at ILRI Uthiru Kenya when I was working there in year 2001.
I am a mature, self-motivated worker who delivers high-quality, on-time reports which solve client’s problems accurately.
I have written many academic and professional industry research papers and tutored many clients from college to university undergraduate, master's and Ph.D. students, and corporate professionals. I anticipate your hiring me.
I know I will deliver the highest quality work you will find anywhere to award me your project work. Please note that I am looking for a long-term work relationship with you. I look forward to you delivering the best service to you.
3.00+
2+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
Show that the payoff given by equation (9.6) is, indeed, equal to the payoff of the butterfly spread. Also show that the butterfly spread can be created by buying a put option with a low strike...
-
Determine the derivative of each function. (a) y = x2x +5 (2x-6)4 (x+2)3 (b) y: 8. [6 marks]. A tangent to the parabola y = x - 4x + 5 is perpendicular to 2x + 8y + 50. Determine the equation of the...
-
Marketing efforts to produce, promote, and reclaim environmentally sensitive products are called ________________ .
-
The T accounts on the next page summarize the ledger of McGregor Gardening Company, Inc. at the end of the first month of operations. Instructions(a) Prepare in the order they occurred the journal...
-
In Exercises find the arc length of the curve on the interval[0, 2]. Involute of a circle: x = cos + sin , y = sin - cos
-
A 1-kg cart and a 2-kg cart are held together with a coupler that contains a small charge. The charge is exploded and sends the \(1-\mathrm{kg}\) cart rolling away at \(+4.0 \mathrm{~m} /...
-
Renkas Heaters selected data for October 2014 are presented here ( in millions): Direct materials inventory 10/ 1/ 2014 ........$ 105 Direct materials purchased .............. 365 Direct materials...
-
12. If the velocity-time graph has the shape AMB, what would be the shape of the corresponding acceleration-time graph? (A) a (B) (C) A (D) a A M B time(t)
-
Consider a derivative V(S t ,r t ,t) dependent on the (nondividend-paying) stock price S t and short rate r t with SDEs given by dS t = (t)S t dt + S t dW t and dr t = ((t) r t )dt + dU t...
-
Consider the SDE dX t = X t dt + X t dW t for the FX rate. By considering the domestic and foreign money market accounts with SDEs dB t = r t B t dt and dB t = r t B t dt and using Girsanovs...
-
How does the variable manufacturing overhead spending variance differ from the materials price variance?
-
Explain the difference between dealer and agency markets. Why do you think both types of markets exist? Is there one type of market that is the best? Explain.
-
Capital Budgeting Tools Consider the following cash flows: (a) What is the payback period for the above project? Assume the cash flows are received continuously throughout each year. (b) If the...
-
Differentiate between sole proprietorships, partnerships and corporations. What are the advantages and weaknesses of each?
-
Discuss what is meant by a stakeholder. In what ways are stakeholders represented in two-tier board structures? How does this differ from companies with a unitary board structure? Use real examples...
-
Many experts suggest that maximizing profit should be the main financial goal of a corporation. Is this a correct view? Explain.
-
Many people have a drug or alcohol problem. Would you hire such people? How would you avoid hiring such people?
-
The Dow Jones Industrial Average reached a high of $ 7801.63 on December 29, 1997. Recall from Example 18.4 that it reached a high of $ 1003 on November 14, 1972. The Consumer Price Index for...
-
AIBN is an azo compound (a compound with a N=N double bond) that is often used as a radical initiator. Upon heating, AIBN liberates nitrogen gas to produce two identical radicals: (a) Give two...
-
Triphenylmethane readily undergoes autooxidation to produce a hydroperoxide: (a) Draw the expected hydroperoxide. (b) Explain why triphenylmethane is so susceptible to autooxidation. (c) In the...
-
Which of the following pure compounds will exhibit hydrogen bonding? a) CH 3 CH 2 OH b) CH 2 O c) C 2 H 4 d) C 2 H 2 e) CH 3 OCH 3 f) CH 3 NH 2 g) C 3 H 8 h) NH 3
-
Correct answer is among"87.5% 84.1% 72.6% 75.8%"Product I's inventory is managed according to the (Q,R) model. The safety stock for Product I is 120. The lead time for replenishing Product I's...
-
Product I's inventory is managed according to the (Q,R) model. The safety stock for Product I is 120. The lead time for replenishing Product I's inventory is 3 weeks, and the weekly demand for...
-
Who should decide how a change effort is launched and implemented continually? Evaluated?
Study smarter with the SolutionInn App