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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BSOP Dec2007 Q4
Hi Sir
Could you please help in calculation how to work following
if di=in28/24 +(0.05+0.5*0.25^2)2 / 0.25?2
i know 0.25?2=0.35355
How to calculate on calculator
in28/24 +(0.05+0.5*0.25^2)2
and then
di=in28/24 +(0.05+0.5*0.25^2)2 / 0.25?2 =0.8956 came how
c=28*0.8159-24*0.7054 e ~0.05*2
how it came c=7.53m
i know first part how to calculate
c=22.8452-16.9296
c=5.9156
but how to calculate on calculator e ~0.05*2
Firstly, 0.25^2 certainly does not equal 0.35355!!!
0.25 x 0.25 is actually equal to 0.0625.
Secondly have you watched my lectures on option pricing, because I go through the calculations one by one in the lecture.
The problem is that different calculators use different logic and the order in which you type in the instructions differs between calculators.
You must have a calculator that has a ‘ln’ and an ‘e’ button on it, and apart from watching my free lecture you are really going to have to look in the instruction manual for your calculator (if you have lost it, then you will be able to find it by searching the model on Google).
Thanks sir
You are welcome 🙂
Hi Sir,
Please how can I calculate the last part of black scholes formula (that is ert) on my calculator?
it is e to the power -rt
So you need to calculate rt and then you need to use the ‘e’ button on your calculator and raise it to the power -rt
As I replied to you yesterday, if you watch my free lecture on option pricing, I go through the calculations step by step.