Question: A stock trades for $ 4 2 per share. A call option on that stock has a strike price of $ 5 2 and an

A stock trades for $42 per share. A call option on that stock has a strike price of $52 and an expiration date nine months in the future. The volatility of the stock's returns is 44%, and the risk-free rate is 3%. What is the Black and Scholes value of this option?
The Black and Scholes value of this call option is $
(Round to the nearest cent.)
A stock trades for $42 per share. A call option on

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

Determine the magnitudes of F1, F2, and F3 for equilibrium of the particle. Units Used: kN = 103 N Given: F4 = 800 N α = 60 deg β = 30 deg γ = 30 deg c = 3 d = 4 F3 F2 F,

Q:

A stock trades for 4 2 dollars per share. A call option on that stock has a strike price of 5 0 dollars and an expiration date six months in the future. The volatility of the stocks return is 3 4 %...

Q:

Stock in Bunyan Brewery is currently priced at $20 per share. A call option with a $20 strike price and 60 days to maturity is quoted at $2. Compare the percentage gains and losses from a $2,000...

Q:

33) A stock is selling for $62 per share. A call option with an esxancise price of $565 sells for $3.85 and expires in three months. The risk-free rate of interest is 2.8 pencent per year 3_...

Q:

72 ) MGT 2100 - Final Review- You are expecting the current stock price to increase in the near future. The stock currently trades for $23 per SH. A call option with a price (strike price) of $25 can...

Q:

1. The three factors chosen are Market, Size, and Book to Market (B/M). Your analyst used the data on Berkshire Hathaway stock returns, performed linear regression, and obtained the three betas....

Q:

Question 1 One year ago, you purchased 300 shares of Southern Cotton at $32.60 a share. During the past year, you received a total of $280 in dividends. Today, you sold your shares for $35.80 a...

Q:

Please complete Chapter 14 problems P14.1, P14.3, P14.5 P14.1 Apple stock is selling for $120 per share. Call options with a $117 exercise (strike) price are priced at $12. What is the intrinsic...

Q:

Consider the following information regarding options on a stock. The stock is priced at $150 per share. The call option is currently priced in the market at $15, and the put option is priced at $12....

Q:

0 Question 19 3 pts A stock currently sells for $25 per share. A call option on the stock with an exercise price of $21 currently sells for 55. The call option is At the money Reflecting negative...

Q:

1 2 You bought a call option with a $100 strike price for $8, and sold a call struck at $110 on the same stock and with the same expiration for a $2 premium. What is your max gain? $2 $0 $2 $4 You...

Q:

1) You are evaluating this possible investment by using the IRR. If your required return is 18 percent, what is the IRR? Round your answer to two decimals. CASH FLOW Year 0: -$130,000 Year...

Q:

Respond that the following statements are true or false: 1. One way to think about free cash flow is that if the amount were withdrawn, it would harm the firm's ability to operate and to produce...

Q:

INSURANCE INFORMATION Health Insurance The entire family is insured under Christina s plan, which has a $ 1 , 0 0 0 per person deductible, an 8 0 / 2 0 coinsurance clause, and a family maximum out -...

Q:

Food and seeds derived from genetically engineered plants and animals are not required to have a label that says it contains products from a GMO (genetically modified organisms). Should food...

Q:

Discuss whether you support or oppose the Supreme Court ruling on gene patents in the 2013 case: Association For Molecular Pathology Et Al Vs Myriad Genetics, Inc., et al. In short they ruled, that...

Q:

Research and summarize one data mining vendor. Additionally, you will identify data from the organization that might be a good target for data mining. Procedure chooses one open source or commercial...

Q:

1. Ammoniacal nitrogen can be determined by treatment of the sample with chloroplatinic acid; the product is slightly soluble ammonium chloride palatinate H2PtCl6 + 2NH4 + (NH4)2PtCl6 + 2H+ The...

Q:

Explain the INC, CMP, JNZ commands. Make short examples that you can use these commands together or separately.

Q:

Use the following scenario to answer the questions. More than half of the population is connected to the internet. Through search engines such as Google, Safari, and Bing, people have the power to...

Q:

=+would you avoid a bank that received negative press coverage because of an ethical or CSR transgression?

Q:

=+3. How did you choose where to open your main bank account? Would you ever choose a bank based on its CSR performance? Alternatively,

Q:

=+4. Go to the Equator Principles Web site (http://www.equatorprinciples.com/). Is it naive to expect huge financial organizations to aspire and adhere to the values and principles contained within...