The value of a European call option on the stock with strike k=102k=102 is: 2.03529 and the amount of dollar to invest in the cash account is $28.694
<h3>European call option</h3>
Given:
R=1.02
S0 = 100
u=1/d= 1.05
Strike(k) = 102
First step
Upside Price = u × S0
Upside Price = 1.05 × 100
Upside Price = 105
Downside Price = S0/u
Downside Price= 100×1/1.05
Downside Price= 95.238
Upside Payoff = upside price - strike rate
Upside Payoff =(105 - 102)
Upside Payoff = 3
Second step
Upside probability=(r - q) / u - d
Upside probability=1.02- (1/1.05)÷ 1.05- (1/1.05)
Upside probability=0.0676190/0.0976190
Upside probability=0.692
Probability of downside = 1 - p(upside)
Probability of downside = 1 - 0.692
Probability of downside = 0.30731722
Third step
European call option=[0.692×3+0.30731722×0]×1/100
European call option=2.03529
Let B represent the Dollar to invest
105D -1.05B=3
95.238D-1.02B=0
Solving for B
B=$28.694
Therefore the value of a European call option on the stock with strike k=102k=102 is: 2.03529 and the amount of dollar to invest in the cash account is $28.694
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Answer:
It will be between $1.00 and $ 1,20
Explanation:
Solution
Given:
From the given question, the price of a flax seed in west Virginia is presently at $1.00
From the law of one price states that since the price of a pound of flax seed is $1.20 in Kentucky,
Then,
The price of a flax seed pound will be between 1.20 and 1.00
Therefore, the price of the flax seed in Kentucky as compared to that of west Virginia will be placed in between prices of $1.20 and $1.00 after the supply by sellers in both market has been adjusted or raised.
<span>1. Find a good spot to store your records--neither too cool, too hot, or exposed to direct light / water.
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Monitor, because soft copy is seen on the screen
The stock market is where shares of public limited companies are traded. An example is the New York stock exchange.