Assume the risk-free rate is 3 percent and use continuous, Financial Management

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Assume the risk-free rate is 3 percent and use continuous

The current price of Fox Co. is $36 a share and its (annualized) standard deviation is 55%. Fox Co. plans to pay $0.25 cash dividend in two months. A 3-month put option on Fox stock with a $35 exercise price is selling for $2. What is the call option price on Fox Co. with the same exercise price ($35) and expiration date (3 months). Assume the risk-free rate is 3 percent and use continuous compounding.

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Financial Management: Assume the risk-free rate is 3 percent and use continuous

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