Consider a stock that is currently trading at $50 and has an annualized volatility of 30%. The stock is not expected to pay any dividends in the next 3 months. The annualized risk-free rate is 4%. A. Calculate the Black-Scholes price of a cash-or-nothing binary call option that matures in 3 months

Answers

Answer 1

So, the Black-Scholes price for any a cash-or-nothing binary call option that matures in 3 months and has a strike price of $50 is $0.489.

Black-Scholes price:

\(C = e^{(-rT)} * N(d_2):\)

N() is the cumulative  function:

d2 = (ln(S/K) + (r - 0.5 * \(sigma^{2}\)) * T) / (sigma * '√(T))

S = $50

sigma = 0.30

T = 0.25 (3 months is a quarter of a year)

r = 0.04

K = $50 (since it is a cash-or-nothing binary option, the payoff depends only on whether the stock price is above or below the strike price)

First, we calculate d2:

d2 =\((ln(50/50) + (0.04 - 0.5 * 0.30^2) * 0.25) / (0.30 * (0.25))\)

= 0

Next, we calculate the value for N(d2), so, which is simply 0.5 since d2 = 0 corresponds to the midpoint for the normal distribution:

N(d2) = 0.5

Finally, we use the Black-Scholes formula to calculate the price of the binary call option:

C = \(e^{(-0.04 * 0.25)\) * 0.5

= 0.489

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Related Questions

Disadvantages of choosing a job that is extremely popular or in demand

Answers

The disadvantage of choosing a job that is very popular or a job that is in high demand is that after a while such a job may become saturated or it would become monotonous.

What is a high demand job?

This is the term that is used to refer to a job that the people that wpould employ labor are constantly in need of. Such a job is one that would require the people that have the qualification to opt in and get the places and the roles that they are to fill.

The issues that may arise from such a job that is in high demand is that after a period, such a job may have a lot of persons that would want to fulfil the role.

The number of qualified persons may become more than the job that is available for the people to do in the long run.

Hence this is a disadvantage. Therefore I would conclude by saying that the disadvantage of choosing a highly popular job is that the number of persons that are willing to fulfil the role may exceed the job overtime.

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Find the final discount date and the net payment date for an invoice dated June 14 with terms of 3/10, net 20.
The final discount date is
(Type whole numbers.)

Answers

According to the given data, the final discount date is June 24 and the net payment date is July 4.

What do you mean by  final discount date?

Discount date is the date that comes ten (10) days after the bill's due date, unless another date is specified in the contract. The discount date is the final day that net rates can be applied to water and/or sewer charges.

The time frame during which an invoice must be fully paid in order to receive a reduction in the amount owed is known as the discount period.

Here,

Calculation of the final discount date:

Final discount date = June 14 + 10 days

Final discount date = June 24

Calculation of Net payment date:

Net payment date = June 14 + 20 days

Net Payment date = July 4

Therefore, through the data,  the final discount date is June 24 and the net payment date is July 4.

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what are the professions and the man power related to teaching field? describe any one​

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Answer:

A profession is an occupation founded upon specialized educational training. for eg: teacher , doctor , pilot etc.And the manpower related to teaching field include teaching sector .teacher:- teacher is a person who provides education for pupils and education. teacher should have commendable skills for helping others learn, guiding, and helping to solve a problem.

hope it is helful for uh.

Which of the following are used for operating expenses?
Intermediate-term loans Operating-term loans
Long-term loans
Short-term loans​

Answers

Answer:

i think po is operating-term loans

Answer:

Short term loans are used for operating expenses

Match the term to the example
Answer Bank:
Goods Marketing
Services Marketing
Mass Marketing
Micromarketing
Business to Business
Macromarketing
For Profit Marketing
Geographic Marketing
Business to Consumer
Nonprofit Marketing
Direct Marketing

Examples:
A company that sells office products to large corporations
Advertising for a diamond ring for Valentine’s Day
Keeping a store franchise in a certain state
Getting donations to help victims of a natural disaster
Identifying customers who want someone to help them plan which investments to purchase
Training car salespeople to identify the right car for different kinds of customers
A grocery store
Billboard advertisements you see along the freeway
Getting people to join an after school extracurricular activity
Studying the effect of advertisements that use photoshop on the self-image of young people
A company that sells furniture

Answers

Answer:

li siento no puesobhsdar las resouestav

What is an example of a composite key in a database table?
O Invoicel
CustomerID
O ProductID
O OrderID + ProductID

Answers

Answer:

The primary key firstName + lastName for students is a composite key.

An instructor leading a brainstorming session among 15 students on ways of reducing environmental impact of two-cycle engine snowmobiles on the national park system is engaged in what type of communication

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The instructor leading a brainstorming session among 15 students on ways of reducing the environmental impact of two-cycle engine snowmobiles on the national park system is engaged in group communication.

Group communication involves the exchange of ideas, information, and opinions among a group of people. In this case, the instructor is facilitating communication among the students, who are all working together to come up with ways to reduce the environmental impact of snowmobiles on the national park system.

Group communication in this context allows for the pooling of diverse perspectives, expertise, and experiences. Through effective communication, the group can explore different strategies, consider the environmental implications, evaluate the feasibility of solutions, and collectively develop actionable plans to mitigate the impact of two-cycle engine snowmobiles.

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How does a bank enforce the requirement of safeguarding your money?

Answers

The use of Mobile banking and electronic means of sending money is a requirement for safeguarding your money.

How does bank help to safeguarding your money?

Individual keep or safe money in the bank to avoid the risk of the money been stolen or loss due to improper way for handling.

Online transactions is one of the safeguard method's used by banks and electronic funds transfer (EFT).

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Help pleaseeeeeeeeeeee!

Help pleaseeeeeeeeeeee!

Answers

Answer:

last one?

Explanation:

Answer:

Use task manager to close pop up ad

if the risk-free rate is 2.2 percent, the inflation rate is 1.9 percent, and the market rate of return is 6.8 percent, what is the amount of the risk premium on a u.s. treasury bill?

Answers

Because it is a government asset and there is no excess return or risk premium on risk-free securities or government securities, the risk premium on the U.S. Treasury bond will be zero.

What do you mean by the U.S treasury bill?

Having a maturity of one year or less, a Treasury Bill (T-Bill) is a short-term obligation of the United States government backed by the Treasury Department. Typically, $1,000 bills are available for purchase from the Treasury. However, some can place non-competitive bids up to a maximum denomination of $5 million.

Treasury notes (T-bills) provide options for short-term investments, often lasting up to one year. For managing short-term liquidity, they are helpful. Currently, the Indian government issues four different types of treasury bills: 14-day, 91-day, 182-day, and 364-day.

In order to address the Central Government's short-term funding needs, the Reserve Bank of India issued what are also referred to as Zero Coupon Bonds.

Here,

Risk-free rate = 2.2 percent

Inflation rate = 1.9 percent

Market rate of return = 6.8 percent

Therefore, because  it is a government asset and there is no excess return or risk premium on risk-free securities or government securities, the risk premium on the U.S. Treasury bond will be zero.

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Which of the following is NOT a responsibility of the Finance department?
A.Obtaining needed funds B.Managing the use of company funds
C.Establishing external relations
D.Creating a financial plan

Answers

The statement "developing the external relations" is correct.

The following information related to the responsibility of the Finance department is:

Receiving the funds that are needed.Managing the fund of the company that is used.Developing the financial plan of the organization.

Therefore we can conclude that The statement "developing the external relations" is correct.

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Breton Woods Standards were found to be inadequate mainly because

Answers

Answer:

A key reason for Bretton Woods' collapse was the inflationary monetary policy that was inappropriate for the key currency country of the system.

Explanation:

The US decision to suspend gold convertibility ended a key aspect of the Bretton Woods system. The remaining part of the System, the adjustable peg disappeared by March 1973.

In step four of the PACED process, you should enter the alternatives and criteria into a _____.

Answers

Answer:notebook

Explanation:

i dont know tbh

On January 25. Coot Company has $350.000 deposited with a local bank. On January 27 , the company writes and malls checks of $30,000 and $70,000 to suppllers. At the end of the month, Coot's financial manager deposits a $55,000 check recelved from a customer in the morning mall and plcks up the end-of-month account summary from the bank The manager notes that only the $30,000 payment of the 27 th has cleared the bank. • What is the company's avallable bolance with its bank?

Answers

Given data:On January 25. Coot Company has 350,000 deposited with a local bank.On January 27, the company writes and mails checks of 30,000 and 70,000 to suppliers.

At the end of the month, Coot's financial manager deposits a 55,000 check received from a customer in the morning mail and picks up the end-of-month account summary from the bankThe manager notes that only the 30,000 payment of the 27th has cleared the bank.Available balance with the bank = Deposits - Outstanding Checks - Uncleared Deposits.

Step 1: Calculation of DepositsThe company has deposited $350,000 on January 25.Now, the company has received a check of 55,000 from a customer. Therefore, the total deposits with the bank = 350,000 + 55,000

= 405,000

Step 2: Calculation of Outstanding checksOutstanding checks are the checks that have been written and mailed but have not yet been presented for payment to the bank. Coot Company has written two checks of 30,000 and 70,000 on January 27.

Therefore, the outstanding checks = 30,000 + 70,000

= 100,000.

Step 3: Calculation of Uncleared depositsUncleared deposits are the deposits that are not yet credited to the account by the bank.Coot's financial manager deposits a check of 55,000 received from a customer at the end of the month, but the bank has not yet cleared it.

So, the uncleared deposits = 55,000Therefore, the available balance with the

bank= Deposits - Outstanding Checks - Uncleared Deposits

= 405,000 - 100,000 - 55,000

= 250,000Therefore, the company's available balance with its bank is 250,000.

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Complete the following sentence.
A traditional cover letter's format includes an introduction, a ______ and a ______ paragraph.

Answers

Answer:

body, closing

That was easy

Explanation:

In the case, the software engineers present at the meeting would concern themselves with ________-level strategy. Multiple choice international generic corporate functional business

Answers

In case, the software engineers present at the meeting would concern themselves with functional level strategy.

Software engineers create and construct computer systems and applications to solve problems in the real world. Software engineers usually referred to as software developers, create software for computers and apps.

Functional-level strategies are the tasks and goals assigned to various divisions to support your corporate strategy and business plan. These strategies outline the results you hope to obtain from the regular operations of particular divisions (or functions) of your company.

Things like prompt delivery of commodities, high-quality procedures and products, and process efficiency are examples of functional-level marketing techniques.

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Which financial advice should Sami follow to get a car loan with a lower interest rate?

A. Make a larger down payment.
B. Get a variable rate loan.
C. Make a smaller down payment.
D. Buy a more expensive car.​

Answers

Answer:

A

Explanation: Although a larger down payment won't guarantee a lower interest rate it might lessen the amount of months, he makes those payments and/or the monthly payment itself. To get a low interest rate he should have a good credit rating and shop around for financing just like he did for the car.

i need help!!!!!!!!!!!!!!!!!!!!!!!!!!

i need help!!!!!!!!!!!!!!!!!!!!!!!!!!

Answers

D rejection please Mark brainliest

what factors contributed to the speed and slowdown of economic
growth by the end of 2018?

Answers

The economic growth rate of a nation is dependent on many factors, both internal and external. These factors can either enhance or impede economic growth.

Among the factors that contributed to the speed and slowdown of economic growth by the end of 2018 were trade tensions, oil prices, fiscal policies, and interest rates.

The slowdown in the global economy was primarily attributed to the escalating trade tensions between the United States and its trading partners.

This is because trade tensions affect consumer confidence, investment decisions, and overall business activities. As a result, both export and import demand reduced.

The tariffs that were put in place by the US and its trading partners resulted in price hikes, which then led to a reduction in consumer purchasing power.

The oil prices also increased, thereby leading to a decrease in global growth.

The fiscal policies implemented by various countries also contributed to the speed and slowdown of economic growth.

For example, the fiscal stimulus package implemented in the US led to a temporary boost in economic growth, but this was not sustainable in the long run.

Higher interest rates, in general, also affect economic growth, particularly in developed economies. This is because it leads to a reduction in borrowing and investment decisions.

Therefore, a high-interest rate environment slows down economic growth. In conclusion, trade tensions, oil prices, fiscal policies, and interest rates all contributed to the speed and slowdown of economic growth by the end of 2018.

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Jackie has been selling gold rings for $50 each. her cost for the rings was $25. she learns that another store on the other side of the mall sells gold rings for $40. what information should jackie consider before deciding if she should change her price?

Answers

When adjusting the price of an established product, Jackie should have knowledge of the pricing considerations and strategies

What are the different types of pricing strategies?

There are 4 types of pricing strategies as follows :

Premium pricing strategySkimming pricing strategyValue pricing strategyPenetration pricing strategy.

In the aforesaid scenario, Jackie will employ a value pricing approach, in which he will reduce the product's cost in order to attract buyers, hence increasing the product's perceived worth.

Thus,

Pricing strategies information should be considered before introducing any changes in the price of the product.

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1. Identify the three types of duties that CBP assesses and how the duty is calculated under each type of duty.How does one protest a duty/liquidation?

Answers

The three types of duties that CBP assesses and how the duty is calculated under each type of duty are as follows:Ad valorem duties: Ad valorem duties are levied as a percentage of the customs value of the imported product, such as 10% of the value of the imported product.

Specific duties: Specific duties are levied at a specific rate per unit of measure, such as per kilogram or per meter.A combination of ad valorem and specific duties: A combination of ad valorem and specific duties is assessed on imported goods under this category, with the rate being a mix of both. For example, a product with a value of $10,000 could be charged a 5% ad valorem duty, as well as a $1 per kilogram specific duty for a total of $15,000 ($10,000 x 5% + $1 x 5,000 kg).

Protesting a duty/liquidation: To protest a duty/liquidation, one must submit a written protest to CBP within 180 days of the liquidation of the goods. The protest must contain a description of the merchandise, the classification of the merchandise, the amount of the duty that is in dispute, and a legal or factual argument. The protest must be signed by the importer or their legal representative, and it must be filed with the port director where the entry was filed. The CBP will examine the protest and issue a ruling, which can be appealed if necessary.

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Which of the following is not an example of professional behavior
?

Answers

What are the answers?

How has globalization effected China? PLS HELP, I NEED BULLET POINTS, NO LINKS :>

Answers

Answer:

Hey mate.....

Explanation:

This is ur answer....

As the global economy shifts its focus towards China, new opportunities for businesses to enter the Chinese market are emerging. In other words, the impact of globalisation on China's economic growth is already being felt. China is rapidly becoming the new champion of economic cooperation, trade and globalisation.

Hope it helps!

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Which of the following statements is correct? The yield to maturity (YTM) is used for cost of equity after adjusting for the tax deductibility of interest on equity All the answers are correct. Long-term debt typically describes debt with a maturity less than one year. Afirm's cost of capital is a weighted average of all its financing costs. The proportions of debt and equity used to determine the weighted average cost of capital for a firm is based on the book value of debt and equity outstanding.

Answers

A firm's cost of capital is a weighted average of all its financing costs, based on market values.

Among the statements provided, the correct statement is: "A firm's cost of capital is a weighted average of all its financing costs."

The cost of capital refers to the overall rate of return required by investors to finance a company's operations. It represents the cost of obtaining funds from different sources, such as debt and equity. The weighted average cost of capital (WACC) is the average rate of return a firm must provide to satisfy its investors and maintain the current value of its stock.

WACC takes into account the proportions of debt and equity in a firm's capital structure. However, it is important to note that the WACC is typically based on the market values of debt and equity, rather than their book values. Market values reflect the current market prices of the securities and provide a more accurate representation of the firm's actual financing costs.

The other statements provided are incorrect:

1. The yield to maturity (YTM) is not used for the cost of equity. YTM is a measure used to calculate the total return anticipated from holding a bond until its maturity, and it is relevant for fixed-income securities such as bonds, not equity.

2. Long-term debt typically refers to debt with a maturity greater than one year, not less than one year.

3. The proportions of debt and equity used to determine the WACC are generally based on the market values of debt and equity outstanding, not their book values.

In summary, the only correct statement is that a firm's cost of capital is a weighted average of all its financing costs, considering the market values of debt and equity in its capital structure.

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A firm's bonds have a maturity of 14 years with a $1,000 face value, have an 11% semiannual coupon, are caliable in 7 years at $1,241.15, and currentiy seil at a price of $1,414.91. What are their nominal yleld to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places
YTM ___ %
YTC ___ %

Answers

The nominal yield to maturity is 6.03% and the nominal yield to call is 7.33%.

YTM 6.03%

YTC 7.33%.

Nominal yield to maturity (YTM) is the yield on a bond assuming that all payments are made as scheduled and that the bond is held to maturity.

The bond has a face value of $1,000 and a semiannual coupon of 11%.

Therefore, each coupon payment is:11% / 2 = 5.50%

The bond has a maturity of 14 years, so there are 14 × 2 = <<14*2=28>>28 coupon payments.

Calculating the price of the bond using a financial calculator gives:

$1,414.91 = $27.50(PVIFAi%, 28) + $1,000(PVIFi%, 28)

where i% is the YTM solving for i%, we get:

i% = 6.03%

Therefore, the nominal yield to maturity is 6.03%

Yield to call is the yield on a bond assuming that it is called at the first call date.

The bond is callable in 7 years at $1,241.15.

Calculating the price of the bond using a financial calculator gives:

$1,414.91 = $27.50(PVIFAi%, 28) + $1,241.15(PVIFi%, 14)

where i% is the YTC solving for i%, we get:

i% = 7.33%

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Which of the following is NOT affected by marketing?
A. The locations you shop
B. The items you purchase
C. The product regulations
D. The use of the products

Answers

Answer:

D, The use of products.

The use of the products is not affected by marketing. Thus, option D is appropriate.

Marketing describes the actions a business takes to encourage the purchase or sale of a good or service. Advertising, selling, and delivering goods to customers or other firms are all included in marketing. Affiliates perform some marketing on behalf of businesses.

Marketing is the procedure of discovering, developing, and providing value to satisfy a target market's needs in terms of products and services, which may also involve choosing a target audience. The process of developing, communicating, delivering, and trading offerings that are valuable to customers, clients, partners, and society at large collectively is known as marketing.

Thus, option D is correct.

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If you are interviewed by more than one person, you should send a thank-you note to _____.


each person in the interview

each person you see in the building

the first person you are introduced to

the person who is obviously leading the interview

Answers

Answer:

option A is correct.

i.e.

each person in the interview.

Explanation:

Because thank-you letter provides a simple but effective way to express gratitude to all the individuals you met with.

Involving subordinates in decision making and in the assignment of tasks is the participative style of leadership. True or false?.

Answers

It is True that Involving subordinates in decision making and in the assignment of tasks is the participative style of leadership.

How can  Involving subordinates in decision making help participative style of leadership?

Decision making  serves as the  identification of  the problem or opportunity as well as  generating alternatives and implementing the solution.

In this case, It is True that Involving subordinates in decision making and in the assignment of tasks is the participative style of leadership.

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From the perspective of the ____, the price at which a unit is exchange is the marginal cost of that unit

Answers

Answer:

From the perspective of the SELLER, the price at which a unit is exchange is the marginal cost of that unit

a license holder must use the earnest money contract forms promulgated by the commission unless a) an attorney prepares the forms and the property owner requires their use. b) the forms do not fit the circumstances of the transaction. c) the agent receives special permission from the texas real estate commission (trec). d) one of the parties is a relocation company.

Answers

Correct option is A, a license holder must use the earnest money contract forms promulgated by the commission unless an attorney prepares the forms and the property owner requires their use.

A company, group, or person that has received a license from another authority to conduct an activity is known as a licensee. The authorization, or license, may be granted openly or secretly.

Licensees shall reimburse the owner of the license through fees, royalties or other forms of revenue-sharing agreements.

An organization that has been granted permission to use assets that are either owned by or under the control of another individual is known as a licensee.

The licensee has two payment choices for the permission: paying the licensor directly or sharing the earnings with them.

Examples of licensee agreements include franchises, trademark licenses, and government licensing.

A business may be operated by the owner of an operating permit.

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Help with Demonstrative French Adjectivesthe description says: A group of friends put together a party for Charles, but he is ungrateful and criticizes all of their choices. Complete his sentences with appropriate demonstrative adjectives.Thank you! 2. How much is 50 percent of 1025 which body of water served as russia's primary access to sea trade early in the nation's history? group of answer choices a)caspian sea b) north sea c) baltic sea d)black sea in a right triangle shaped house the roof is 51 feet long and the base of the is 29 feet across caculate the the height of the house ethnic religions are those that develop and attract people who are part of a specific cultural group, or who are from a specific location.. true or false Smoothie Activity 6. Using the relative frequency table, create a segmented bar graph by employee type using technology or by hand. If using Excel technology the columns may need to be switched after inserting the chart. Click on the chart and the "Chart Design" ribbon will pop up. Then select "Switch Row/Column." (10 points) A steel propeller shaft is to transmit 5.5 MW at 180 rpm without exceeding a shearing stress of 60 MPa or twisting through more than 1 in a length of 25 diameters. Calculate the proper diameter if G = 83 GPa. Melissa recently paid $715 for roundtrip airfare to San Francisco to attend a business conference for three days. Melissa also paid the following expenses: $440 fee to register for the conference, $310 per night for three nights lodging, $270 for meals in restaurants and $560 for cab fare a) What amount of these cost can Melissa deduct as a business expense? What affect does an increase in enzyme concentration have on the reaction rate? the ball is pushed so it begins to roll down the hill . it now has _______A) kinetic energy B) a rest position C) more potential D) no energy you have three substances in front of you at room temperature. One is solid phase one is in a liquid phase and one is in the gaseous phase. Which one has the strongest attractive forces between molecules before pioneering genetic science, what did gregor mendel research? to become a citizen of the united states, you musta. have lived in the united states for at least six monthsc. file a request form in a federal courtd. pass an english and government test Kinetic and potential energy are forms of what kind of energy?gravitationalchemicalelectricalmechanical Why does Dr. Saltman say that people are sometimes more extreme online than in person? The following ionic equation (not balanced) represents thereaction that occurs when aqueous solutions of ammonium sulfate andsilver(I) acetate are combined. Identify the spectators ions in theequat By using appropriate diagrams, discuss the role of the monetary and fiscal policies in the New Keynesian sticky price model. 6. Why important is Fleance's death to Macbeth? a new crew of painters takes two times as long to paint a small apartment as the experienced crew together both crews can paint the apartment in 6 hours how many hours does it take the experienced crew to paint the apartment The wavelength of red helium-neon laser light in air is 632.8nm.(a) What is its frequency?