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What is the premium for a call option on a stock with the following characteristics? Current stock...

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Finance

  1. What is the premium for a call option on a stock with thefollowing characteristics?

Current stock price

$70

Stock price volatility (standard deviation)

0.0693

Continuously compounded annual risk free rate

11.94%

Strike price (or exercise price)

$80

Time to expiration (in years)

9 months

What is the option premium if thisoption is a European put and the stock will pay a dividend of $3 insix months?

Answer & Explanation Solved by verified expert
4.0 Ratings (812 Votes)
SolutionWe will use BlackScholes formula for calculation of call optionand put    See Answer
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