Let S = $52, s = 20%, and r = 7% (continuously compounded). The stock is...

Let S = $52, s = 20%, and r = 7% (continuously compounded). The stock is set to pay a single dividend of $1.10 nine months from today, with no further dividends expected this year. Use the Black-Scholes model (adjusted for the dividend) to compute the value of a one-year $50-strike European call option on the stock.

Answer = $6.43 Please solve and show all work. Thanks

Expert Solution

FORMULAS ARE GIVEN. CELL REFERENCES ARE ALSO GIVEN. SO MANUALLY AND USING EXCEL, BOTH WAYS, WE CAN GET SOLUTION.

jeff jeffy answered 1 year ago

Let S = $65, r = 6% (continuously compounded), d = 1%, s = 30%, T...

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