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Category > Business & Finance Posted 29 Jul 2017 My Price 11.00

1. Imagine that Google’s stock price will either rise by 25%

1. Imagine that Google’s stock price will either rise by 25% or fall by 20% over the next six months. Recalculate the value of the call option (exercise price = $430) using ( a ) the replicating portfolio method and ( b ) the risk-neutral method. Explain intuitively why the option value falls from the value compute.

2. “An option is always riskier than the stock it is written on.” True or false? How does the risk of an option change when the stock price changes?

 
 
 

 

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Status NEW Posted 29 Jul 2017 03:07 PM My Price 11.00

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