This preview shows page 1. Sign up to view the full content.
Unformatted text preview: 0.5 (1) 0.5 d 2 = 0.1688  (.0687) 0.5 (1) 0.5 = 0.0933 From Excel function NORMSDIST, or approximated from the table in Appendix A: N(d 1 ) = 0.5670 N(d 2 ) = 0.4628 Using the BlackScholes Option Pricing Model, you calculate the option’s value as: V = P[N(d 1 )]  t r RF Xe − [N(d 2 )] = $18.646(0.5670)  $20e (0.08)(1) (0.4628) = $10.572  $8.544 = $2.028 million....
View
Full
Document
This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
 Spring '08
 Staff

Click to edit the document details