The writer is very fast, professional and responded to the review request fast also. Thank you.
; 0<t<T
where X is the price of the stock, and r is the interest rate (assumed to be constant with time), T is the expiration date, t is the current time(whence T-t is the time to expiration in years), E is the expiration or strike price , CE is the value of the call at time t, and PE is the value of the put at time t.
a Long 1 conversion means long 100 shares of stock, long 1 put, and short one
call of the same strike. Find a formula, using Put-Call Parity, for the value,
W, of the conversion. What is this value, WT, at expiration? What is the
value, W0, when t = 0? Do these values, W, depend on the price
of the stock, X? Explain. Graph WT versus X.
b Find dW/dt and d2W/dt2 the first and second derivative. Using the rules of
the calculus sketch the graph of W versus t connecting (0,W0) and (T,WT).
Find, if they exist, the maxima, minima, inflection points, intervals of
increase, decrease, concave up, and concave down. Use the rules of calculus.
c Betty and Bob are day traders. They will do a trade and then take it off at the
end of the day. Assume that at the end of the day all prices equal their
values. Suppose that MCD is $47.75 on a day that has 146 days left to
expiration and interest rates are 9% per annum continuously compounded.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more