Use the following information calculate the option's price. You are analyzing a call option for Boeing's...

 

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Use the following information calculate the option's price. You are analyzing a call option for Boeing's stock, which is currently priced at $190 per share (stock price). The option's exercise price is $215. The option has a three-month time to maturity, the 3-month risk-free rate is 0.3% and the market return is expected to be 7.6%. You expect the following possible stock prices in three months ($170 or $249). Calculate the value of this option using the portfolio replication method. You will be asked to input some of your work below. Use the following information calculate the option's price. You are analyzing a call option for Boeing's stock, which is currently priced at $190 per share (stock price). The option's exercise price is $215. The option has a three-month time to maturity, the 3-month risk-free rate is 0.3% and the market return is expected to be 7.6%. You expect the following possible stock prices in three months ($170 or $249). Calculate the value of this option using the portfolio replication method. You will be asked to input some of your work below.

Answer rating: 100% (QA)

To calculate the value of the option using the portfolio replication method we need to create a portfolio that replicates the same cash flows as the o... View the full answer