how you estimated the inputs to the B-S formula. a. Asset value b. Exercise price c. Volatility of asset returns d. Time to maturity e. Risk-free rate HINT: Note that the time to maturity of the options is when uncertainty is resolved not necessarily when the
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Option Valuation Chapter 21 Intrinsic and Time Value intrinsic value of in-the-money options = the payoff that could be obtained from the immediate exercise of the option for a call option: stock price – exercise price for a put option: exercise price – stock price the intrinsic value for out-the-money or at-themoney options is equal to 0 time value of an option = difference between actual call price and intrinsic value as time approaches expiration date‚ time value goes to zero 21-2
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MiniCase 2 Blades‚ Inc. Chap 5 1. If Blades uses call options to hedge its yen payables‚ should it use the call option with the exercise price of $0.00756 or the call option with the exercise price of $0.00792? Describe the tradeoff. 2. Should Blades allow its yen position to be unhedged? Describe the tradeoff. Chap 6 1. Did the intervention effort by the Thai government constitute direct or indirect intervention? Explain. 2. Did the intervention by the
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following are always positively related to the price of a European call option on a stock? c. The volatility 5. When we talked about Vega hedging‚ if a portfolio has 1000 shares of SPY and 10 contracts of at-the-money December 2013 put option on SPY (and nothing else in the portfolio)‚ is the portfolio vega neutral? c. No‚ the portfolio can never be vega neutral. 6. Which of the following is not true? a. When a CBOE option on IBM is exercised‚ IBM issues more stock 7. Which of the following
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Trading volatility is nothing new for option traders. Most option traders rely heavily on volatility information to choose their trades. For this reason‚ the Chicago Board Options Exchange (CBOE) Volatility Index‚ more commonly known by its ticker symbol VIX‚ has been a popular trading tool for option and equity traders since its introduction in 1993. Until recently‚ traders used regular equity or index options to trade volatility‚ but many quickly realized that this was not the best method. On Feb
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Walking Through Some Examples of Futures and Options Contracts – Speculation and Hedging As Dr. Cogley said in class the other day‚ sometimes futures contracts and options are hard to wrap your head around until you see them a few times. So I’ve written up some examples similar to those Dr. Cogley did in lecture‚ with a little more explanation about how we get the results that we do. But before we jump into that‚ we need to revisit our terms. 1. Forward contract: A buyer and a seller agree to a specific
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Many years ago stock options were rarely used as incidental benefits for top executives. Nowadays‚ compensating employee whit stock options has become an increasingly common practice. Before the year 1996‚ only the intrinsic value method was used to record these transactions. This method distorted the issuer’s reported financial condition and results of operations‚ which could lead to inappropriate decisions taken by investors. Followed by the increased use of employee stock options and the surrounding
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STOCK OPTIONS - AN EFFECTIVE COMPENSATION METHOD Stock Options have become the greatest form of remuneration for big names in organizations across the United States (Hall‚ 2000). The senior executives‚ who are given this option‚ can buy shares of the company at what Hall (2000) describes as the “exercise price”. They could be given “at the money”‚ “out of the money” or “in the money” price (Hall‚ 2000). Stock Options are helpful in motivating the holders to perform for the benefit of the company
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The Binary Opposition Narrative in Life of Pi 李英 2012010285 Abstract: Ever since its publication in 2002‚ Life of Pi has gained great popularity and high critical acclaim from critical circle. It arose the study of Li of Pi from various angels. But most kinds of analysis about the novel are focus on existing doubts about the story‚ and the religious symbols in the novels. The binary opposition narrative in the novel discussed rarely. The novel is full of
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خضر 2012\2011 ﻣﻴﺴﺎء ﻋﺒﺪ ﻋﻠﻲ ﺧﻀﺮاﻟﺪﺑﺎس اﻟﺠﺎﻣﻌﺔ اﻟﺘﻜﻨﻮﻟﻮﺟﻴﺔ/ﻗﺴﻢ ﻋﻠﻮم اﻟﺤﺎﺳﻮب Contents Lectured One: Number system operation 1- Decimal numbers. 2- Binary numbers. 3- Octal numbers. 4- Hexadecimal numbers. Lectured Two: Binary arithmetic 1- Binary Addition. 2- Binary Subtraction. 3- 1 ’s and 2 ’s Complement of Binary Number. 4- Hexadecimal Addition &Subtraction. 5- Octal Addition &Subtraction. 6- Gray Code. 7- Access3 code. Lectured Three: Logic Gats 1- Set of Gats AND‚
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