The managers of Soup Inc. consider the opportunity to open a new soup restaurant in a small
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Question:
(Part 1) Investing in market research creates an option.Briefly describe the underlying for the option and the key? What is the strike price for the option?
• (Part 2) What is the value of the option created by marketresearch if o is 20% and the continuously compoundedrisk-free rate is 5% per year? (Please use time intervals of 3months for your binomial tree.)
• (Part 3) What is your recommendation for the managersregarding the restaurant and market research?
Related Book For
Introduction to Management Science A Modeling and Cases Studies Approach with Spreadsheets
ISBN: 978-0078024061
5th edition
Authors: Frederick S. Hillier, Mark S. Hillier
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