1. How is a “riskless hedge” used in the Black Scholes OPM?
2. A finance company offers a 24-month installment loan with an APR of 13.5%. Robert wishes to use the loan to finance a delivery truck for $31,200. After first using Table 13-1 from your text to find the finance charge, calculate the monthly payment.
3. In the Black-Scholes OPM, what happens to the value of a put option if variance increases?