Shares of Apple are currently trading at $86 with volatility of returns of 20% per annum. The annual continuously compounded risk-free rate of interest is 1.5%.
Answered - What, according to the Black Scholes option pricing model, will be the exercise price of a 6-month European-style put option on Apple with an exercise price of $95 ?
Answered - Every moth, the share price is expected either to increase, by a multiplicative factor of u=1.1, or decrease. What will the price of the put option be if it is American-style?
Question - Explain and analyse your findings in the first 2 parts. Please refer to other 2 questions that have been posted