Sir what is the relationship between N(d1) and N(-d1)?
I ask because in Marengo Dec 2010,they have asked you to assume delta is N(-d1)
When I use the Black scholes formula I find d1 = -0.0552 use the distribution table and SUBTRACT 0.5 from my distritubution table answer.
However I see the answer that what they did was
d1=-0.0552
And then
-d1= 0.0552 (Note the sign change)
And because of this they now ADD the 0.5 from the distribution table..
Why have they swapped the negative sign around..this is crucial because it determines wether to add or subtract that 0.5 distribution table answer.
Ask the Tutor ACCA AFM
N(-d1)
D1 = - 0.0552
So....- D1 = - - 0.0552 = + 0.0552
(two minus's become a plus :-) )
Sign into reply to this topic.
