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BSOP Dec2007 Q4

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BSOP Dec2007 Q4

  • This topic has 6 replies, 3 voices, and was last updated 8 years ago by John Moffat.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • August 25, 2016 at 10:29 pm #335205
    brain33
    Member
    • Topics: 9
    • Replies: 7
    • ☆

    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

    August 25, 2016 at 10:55 pm #335211
    brain33
    Member
    • Topics: 9
    • Replies: 7
    • ☆

    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

    August 26, 2016 at 6:51 am #335251
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    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).

    August 26, 2016 at 3:29 pm #335347
    brain33
    Member
    • Topics: 9
    • Replies: 7
    • ☆

    Thanks sir

    August 26, 2016 at 4:11 pm #335368
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

    September 2, 2016 at 8:49 am #337006
    unyimeedem
    Member
    • Topics: 1
    • Replies: 40
    • ☆

    Hi Sir,

    Please how can I calculate the last part of black scholes formula (that is ert) on my calculator?

    September 2, 2016 at 12:11 pm #337052
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    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.

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