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Nente Co June 12 Adapted Part c Black schole option pricing model

Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › Nente Co June 12 Adapted Part c Black schole option pricing model

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by tennyson123.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 1, 2021 at 3:42 pm #612374
    naini008
    Participant
    • Topics: 7
    • Replies: 11
    • ☆

    I calculated d1 and d2 value and its understood
    but we know if d1 and d2 are +ve then we add 0.5 to standard normal distribution table values and if D1 & d2 turns out to be -ve then we subtract 0.5 from their respective values.
    As per answers
    D1 was 0.359
    D2 was -0.235

    when I look up for values d1 0.359 in normal distribution table it gives value of 0.1517 and after adding 0.5 in this value we get 0.6517 N(d1)
    but in the kit answer it shows N(d1) 0.6402

    Similarly -0.235 should give us value of 0.0987 and as it is d2 was -ve we subtract 0.5 form its respective figure and arrive at N(d2) of 0.4013 and again when I compare it with answer in the kit there is a different value i-e 0.4071

    the difference is not huge but due to the difference my answer does not matches.
    I would really appreciate if any one can explain this.

    March 30, 2021 at 12:39 pm #615511
    tennyson123
    Participant
    • Topics: 1
    • Replies: 15
    • ☆

    I think values are rounded to .36 and .24.

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