What is the risk neutral probability of the stock price, Finance Basics

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What is the risk neutral probability of the stock price

The current price of a non-divident paying stock is $30. Over the next six months it is expected to rise to $36 or fall to $26. Assume the risk-free rate is zero.

i) What long position in the stock is necessary to hedge a long put option when the strike price is $32? Give the number of shares purchased as a percentage fo the number of options purchased option.

ii) What is the value of the put option?

iii) What is the risk neutral probability of the stock price moving up?

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Finance Basics: What is the risk neutral probability of the stock price

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Finance Basics: What is the risk neutral probability of the stock price

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Finance Basics: What is the risk neutral probability of the stock price

Reference No:- TGS0728104

Recent Questions Asked Finance Basics

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