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What Is the Value of a European Call Futures Option

question 7

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What is the value of a European call futures option where the futures price is 50,the strike price is 50,the risk-free rate is 5%,the volatility is 20% and the time to maturity is three months?


Definitions:

Marginal Product

The additional output that is produced by using one more unit of a particular input, holding all other inputs constant.

Number of Workers

The total count of individuals employed or available for employment within a business or economy.

Law of Diminishing Returns

The principle that as one factor of production is increased while others are held constant, the incremental gains in output will eventually decrease.

Marginal Output

The additional output that results from using one more unit of a particular input, holding all other inputs constant.

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