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#1
02-15-2008, 04:41 PM
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ASM 14.19 and 14.20 errata?
Should the dividend rates be switched in the log fraction in d1 for each of these problems?
14.19 Stock I: target stock, dividend rate 2%, price 42 Stock II: base stock, dividend rate 3%, price 84 6 month option to acquire 200 shares of Stock I for 100 shares of Stock II d1 = ln([8400e^-.03/2] / [8400e^-.02/2]) + ... = -.015 - -.01 + ... = -.005 (not +.005) similar for 14.20 
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