Intro Consider the following information about a European call option: A B D Risk-free rate 0.08 EAR Option type Option type Strike price European Call 290 Years to exp. 0.4 1 --| | | | | No. of periods Period length 0.4 years =B5/B6 292 9 Stock price now 10 Sigma 11 Up 0.48 0.3547 =EXP(B$10*B$7^0.5)-1 =EXP(-B$10*B$7^0.5)-1 12 Down -0.2618 18 | Attempt 1/10 for 10 pts. Part 1 What will be the stock price if the stock price goes down? 0+ decimals Submit Part 2 18 Attempt 1/10 for 10 pts. How many shares of stock do you need to buy to create the replicating portfolio (enter the number of shares sold short as a negative number)? 2+ decimals Submit Part 3 IB | Attempt 1/10 for 10 pts. How much money do you need to invest to create a portfolio that replicates the payoff from one call option (enter any amount borrowed as a negative number)? 0+ decimals Submit IB | Attempt 1/10 for 10 pts. Part 4 What should be the price (premium) of the call option? 1+ decimals Submit Intro Consider the following information about a European call option: A B D Risk-free rate 0.08 EAR Option type Option type Strike price European Call 290 Years to exp. 0.4 1 --| | | | | No. of periods Period length 0.4 years =B5/B6 292 9 Stock price now 10 Sigma 11 Up 0.48 0.3547 =EXP(B$10*B$7^0.5)-1 =EXP(-B$10*B$7^0.5)-1 12 Down -0.2618 18 | Attempt 1/10 for 10 pts. Part 1 What will be the stock price if the stock price goes down? 0+ decimals Submit Part 2 18 Attempt 1/10 for 10 pts. How many shares of stock do you need to buy to create the replicating portfolio (enter the number of shares sold short as a negative number)? 2+ decimals Submit Part 3 IB | Attempt 1/10 for 10 pts. How much money do you need to invest to create a portfolio that replicates the payoff from one call option (enter any amount borrowed as a negative number)? 0+ decimals Submit IB | Attempt 1/10 for 10 pts. Part 4 What should be the price (premium) of the call option? 1+ decimals Submit