Thank you professon Damodaran for the great course! The test solution document is actually same as the question document. I got my answers as below: 1d, 2b, 3d, 4b, 5c, 6c, and would love to know if I get them right or not.
Even I got the same answers. But, in the solutions for the questions 5 and 6, though the answers are correct there are some minor substitution mistakes: Q5. t =(3/12) years(in the soln mistakenly they have used 5)) in the second term: 50 x e^(-0.03 x (3/12) (/*instead of 5*/)) x 0.2778 Q6. r = 0.03 (in the soln they have used 0.05). So, the second term is: -50e^(0.03(/* instead of 0.05*/) x 5) x 0.3152
Prof, I have 2 questions. 1. In binomial model, why have not you considered time factor t=2( assuming 2 months)? 2. An why are we considering the risk free rate of return for the same. Thanks
late response but you just calculate D and B via the formulas given above: 70D-1,11B = 33,96 35D-1,11B = 4,99 ==> 70D -1,11B - (35D-1,11B) = 33,96 -4,99 Solve for D first and then you can find B
Thanks Sir for the valuable stuff to make our life to njoy with the essense of finance.....
Thank you professon Damodaran for the great course! The test solution document is actually same as the question document. I got my answers as below: 1d, 2b, 3d, 4b, 5c, 6c, and would love to know if I get them right or not.
If it makes you feel any better I got all of the same answers.
The test solution has 3 pages, the solution is on the 3rd page. And your answers are correct.
@@Raj-zp5iw Thank you!
Even I got the same answers. But, in the solutions for the questions 5 and 6, though the answers are correct there are some minor substitution mistakes:
Q5. t =(3/12) years(in the soln mistakenly they have used 5)) in the second term:
50 x e^(-0.03 x (3/12) (/*instead of 5*/)) x 0.2778
Q6. r = 0.03 (in the soln they have used 0.05). So, the second term is:
-50e^(0.03(/* instead of 0.05*/) x 5) x 0.3152
@@nkn4240 hey i was wondering if you could help me on q3, why does it says the strike price of 40 gives 35 cash flow. How'd we get to the cash flow?
Dr. Damodaran,
The post class test solution PDF is same as the post class test PDF. Would you please update this when you have a moment. Thank you!
You should use the delta formula for explain Better how ti find the percentage of stock to buy
The test solution has 3 pages, the solution is on the 3rd page.
hey raj, would you mind helping me on q3, im stuck. Please and thank you.
question 4**
Prof, I have 2 questions.
1. In binomial model, why have not you considered time factor t=2( assuming 2 months)?
2. An why are we considering the risk free rate of return for the same.
Thanks
Under which condition you would buy or sell call option?
Thank you…
H, how did you guys get D=0.8278 , B=21.61
late response but you just calculate D and B via the formulas given above:
70D-1,11B = 33,96
35D-1,11B = 4,99
==> 70D -1,11B - (35D-1,11B) = 33,96 -4,99
Solve for D first and then you can find B
thank you@@lalaoepsi7572