Do NOT attempt to complete this assignment until you have completed all of the class assignments through Module 11. You can start reading about the company, which is Whole Foods, Inc., but you need to understand the Greeks and the Black Scholes model in order to do this assignment correctly.
If you have kept up with the class assignments, you should not have any trouble with this assignment. If you are behind, please get caught up before you attempt this assignment. Most of the poor grades earned on this assignment happen because students have not mastered the class material to date. An equal number of poor grades result because students do not follow the directions and/or just don’t answer the questions.
You MUST complete and turn in this assignment on time in order to pass the class. If you cannot do this assignment, you will NOT pass the final exam. If you decide not to do this assignment, you have an “F” in this class.
Please list your answer to each question, by question number. I grade on quality not quantity. If you use outside sources, you MUST properly reference them. If you are not familiar with standardized referencing, please go to www.citationmachine.net for assistance. My preference in style is APA. Please pay attention to your grammar, format and spelling – points will be deducted for errors in these areas besides errors in content. Please upload your assignments to the Assignment Drop Box.
Your assignment is to value two (2) call options, using two (2) different option-pricing calculators, and/ or pricing programs. Therefore, your answer will include 4 valuations (2 for each expiration). Some places to look for option pricing models are Google, Yahoo! Finance, and the State Farm Financial Literacy Lab (CBC 252). Using a basic Black Scholes model from two different resources does NOT fulfill the requirements of this assignment – two DIFFERENT pricing models are required. Please think outside of the box. You must properly reference the sites or sources where you found your pricing models.
Use a standard deviation of 20 and a risk free rate of 2%.
Please keep in mind that this is more of a critical thinking exercise than a quantitative exercise. I will assess your answer to #1 & # 4 (the calculations) in a quantitative manor, but the rest of your assignment will be assessed on how well you present and explain your results. If you use any outside sources, you MUST reference them properly – see www.citationmachine.net for referencing assistance.
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