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| Chapter 26 - Pricing Options |
| 413 |
The probabilities in the four period binomial model should be
1/16
1/4
3/8
1/4
1/16
so that the probabilities sum to 1.00
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Question 26-6 D. should read:
What premium should you be willing to pay for the 91 day
put
option on HR?
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Paragraph 3.
The differences between the payment amounts go to the intermediary. The dollar payment is paid by Airlease. On a principal of $9 million Airlease must pay 6.3% and Boeing receives 5.0%. The remaining 1.3% goes to the intermediary. The euro payment is paid by Boeing. On a principal of €10 million Boeing must pay 11.90% and Airlease receives 13.00%. The 1.1% difference must be made up by the intermediary.
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