The writer is very fast, professional and responded to the review request fast also. Thank you.
Consider the following questions on the pricing of options on the stock of ARB. a. A share of ARB sells for $65 and has a standard deviation of 20%. The current risk free rate is 9% and the stock pays two dividends: (1) $2.00 dividend just prior to the option’s expiration date, which is 91 days from now (exactly one-quarter of a year); and (2) a $2.00 dividend 182 days from now (i.e., exactly one-half year). Calculate the Black-Scholes value for a European-style call option with an exercise price of $70. b. What would be the price of a 91-day European-style put option on ARB having the same exercise price? c. Calculate the change in the call option s value that would occur if ARB’s management suddenly decided to suspend dividend payments and this action had no effect on the price of the company s stock? d. Briefly describe (without calculations) how your answer in Part a would differ under the following separate circumstances: (1) the volatility of ARB stock increases to 30% and (2) the risk free rate decreases to 8%.
Show more
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