Question: Using the data in Table 21.1, compare the price on July 24,2009 , of the following options on JetBlue stock to the price predicted by

Using the data in Table 21.1, compare the price on July

Using the data in Table 21.1, compare the price on July 24,2009 , of the following options on JetBlue stock to the price predicted by the Black-Scholes formula. Assume that the standard deviation of JetBlue stock is 65% per year and that the short-term risk-free rate of interest is 1.0% per year. a. December 2009 call option with a $5.00 strike price. b. December 2009 put option with a $6.00 strike price. c. March 2010 put option with a $7.00 strike price. a. December 2009 call option with a $5.00 strike price. The December contract expires on the Saturday (December 19) following the third Friday of December; there are 45 days left until expiration. The price of the call according to the Black-Scholes formula is 9 (Round to the nearest cent.) b. December 2009 put option with a $6.00 strike price. The price of the put according to the Black-Scholes formula is $ (Round to the nearest cent.) JetBlue Option Quotes Source: Chicago Board Options Exchange at www.cboe.com

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=+I will distribute copies of the overall divisional budget and announce the date of the next budget meeting.

=+group discussion. Take notes individually during the meeting and then work together to answer the following questions. Submit your conclusions in an e-mail message to your instructor.

=+Discussion: How can we do a better job of anticipating and preventing cost overruns? Meeting will take place in Conference Room 3.