Blog

Nixon’s Watergate related resignation came with the revelation that he had:

In 2005, Hurricane Katrina

One of the most powerful arguments in favor of health-care reform was:

IBM stock currently sells for 84 dollars per share. Over 8 months the price will either go up by 7.5 percent or down by −3.0 percent. The risk-free rate of interest is 4.5 percent continuously compounded. A call option with strike price 83 and maturity of 8 months has a delta of 0.82766. What is the value of this call option?

IBM stock currently sells for 44 dollars per share. The implied volatility equals 45.0 percent. The risk-free rate of interest is 7.0 percent continuously compounded. If you owned 100 shares of IBM stock with strike price 45 and maturity of 5 months, how many call options would you have to buy (sell) to create a delta-neutral hedge? Assume each option controls one share of IBM stock.

Which of the following creates a bull spread?

IBM stock currently sells for 84 dollars per share. The implied volatility equals 47.5 percent. The risk-free rate of interest is 4.5 percent continuously compounded. What is the value of a put option with strike price 83 and maturity of 8 months?

Which of the following creates a bull spread?

Frank Lloyd Wright loved the International Style of architecture.

IBM stock currently sells for 92 dollars per share. Over 3 months the price will either go up by 9.5 percent or down by −6.0 percent. The risk-free rate of interest is 3.5 percent continuously compounded. What is the value of a put option with strike price 89 and maturity of 3 months?