Essay
The CEO of NuValue was granted 1,000,000 options.The equity price at the time of the granting of
the options was £45 and the options are at the money.The risk free rate was 5% and the options
expire in 5 years.The variance on the equity is .04.What is the value of the options contract? If he
had negotiated a larger salary and only 10,000 options, what would be the value of the options
contract?
Correct Answer:
Verified
d1 = [.05 + (.50x.04)(5)]/ √(.04)5
d1 = ...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
d1 = ...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q19: Why would the company pay the executive
Q24: The risk-neutral probabilities for an asset, with
Q25: The executive janitor of NuValue was granted
Q26: A firm in the extraction industry whose
Q27: Real option valuation requires a thorough knowledge
Q30: Ima Greedy, the CFO of Financial Saving
Q31: Walter Maxim, the CEO of Digital Storage
Q32: Rejecting an investment today forever may not
Q33: An example of a special option is:<br>A)an
Q34: The value of the options awarded to