What would be the Excel formula in Spreadsheet for the Black-Scholes value of a straddleposition? 1INPUTS 2Standard
Question:
1INPUTS 2Standard deviation (annual 0.2783 OUTPUTS d1 d2 FORMULA FOR OUTPUT IN COLUMNE 0.0029 (LN(B5/B6) (B4-B7+.5 B22) B3 (B2 SORT (B3)) 3 Maturity (in years) 4 Risk-free rate (annual) 5 Stock 0.5 0.06 N(d1) 100 105 0.5012NORMSDIST(E2) 0.4231 7.0000 N(d2) B/S call value NORMSDIST(E3) 6 Exercise price 7 Dividend yield (annual) BIS put value 8.8968 B6 EXP(-B4 B3)(1-E5-B5 EXP B7 B3)(1 E4)
Step by Step Answer:
A straddle is a call and a put The BlackScholes valu...View the full answer
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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