Risk free rate = rfr = 0.10 or 10%
Time to maturity (by days in year) = (T) = 50/365
Exercise Price (X) = $40
Standard deviation (σ) = 0.23
Stock Price (S) = $42
(3)Given the following information, calculate the theoretical intrinsic value of the Call option using the Black Scholes Model. IF the market price for the Call option = $11, should the investor buy?
S = 14 = Stock Price
X = 16 = Exercise or Strike Price
r = 0.05 = Risk Free Rate
T = 0.25 = Time to Maturity (as a fraction of one year)
N(d1) = 0.1469
N(d2) = 0.1230"
Dear Student, Please find... View the full answer