Finance Excel Problem

1) 2) 3) 4) All questions are equally weighted. You have three European 3-Month XYZ calls with exercise prices 100, 120 and 130. The calls are at $8, 5 and 3, respectively. Do you see any arbitrage opportunity? Justify your answer. You have XYZ trading at $42. European 6-month 40 calls and puts are traded at: call put bid/ask 5 / 5.5 2.75 / 3.25 Assuming the risk free rate is 0%, do you see any arbitrage opportunity? Justify your answer. Show that options are riskier than the underlying assets. You have a project valued at 200 that could increase or decrease by 25% per period for two pe The project has three embedded options: 1. option to abandon at 190; 2. a contraction option with a strike of 50 with an 80% of original value; and 3. an expansion option with a strike of 70 with 130% of original value. The risk free rate is 5% and the WACC is 10%. What is the value of all the options combined?

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