Suppose an investor wants to replicate a call option on the…

Suppose an investor wants to replicate a call option on the following stock and that the assumptions of the BSOPM are correct.The underlying stock’s price is $83.50 and the annualized volatility of its log-returns is 54%. The option to be replicated has a strike price of $75.75 and a three-month maturity. The risk-free rate is currently 5.00% per year, continuously compounded.How much cash would the investor need to save or borrow to replicate the call?

Challenge You are a U.S.-based currency speculator researchi…

Challenge You are a U.S.-based currency speculator researching call options on the EUR. The currency spot exchange rate is 1.050 USD per 1 EUR. You find that the price of 1.075-strike calls with one-year remaining maturity is 0.05 USD per EUR. If the risk-free rate in USD is currently 5.00 percent and market estimate of the exchange rate’s volatility is 15.00 percent, what EUR risk-free rate is implied by the observed call price? Enter your answer as a percentage, rounded to the nearest 0.0001%.

You are assessing a middle-aged woman who is acutely disorie…

You are assessing a middle-aged woman who is acutely disoriented. According to her husband, she has bipolar disorder and, to the best of his knowledge, has been compliant with her medication. Her blood pressure is 106/66 mm Hg, pulse rate is 100 beats/min and strong, and respirations are 14 breaths/min and regular. During your care of this patient, it is MOST important to: