Assignment title: Information
Case 2: Sleepless in L.A.
Assignment Questions
1. How can one use the Black-Scholes Model to price options? What inputs does it require? How do these different inputs affect the values of both call and put option prices?
2. Referring the case exhibit 3, Can you use the Black-Scholes Model to verify the value of these publicly traded options? Does the model give the same value as the market value? Why or why not?
3. Can option pricing help justify why MicroComp's market capitalization is not zero? Perform the analysis using data provided by the case.
4. Can option pricing be used to value MicroComp's risky bond? You need to perform numerical analysis using data provided by the case.