Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / A binary option pays off $150 if a stock price is greater than $40 in three months

A binary option pays off $150 if a stock price is greater than $40 in three months

Finance

A binary option pays off $150 if a stock price is greater than $40 in three months. The
current stock price is $35 and its volatility is 35%. The risk-free rate is 4% and the expected return on the stock is 10%.
1 What is the value of the option?
2 What is the real-world probability that the payoff will be received?

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE