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A10_q7 ASET

E

Edwin

Member
We are asked to show that the price of the call is 20.60, it was frustrating to get a different answer several times this was because the ER and ASET seems to say that N(-0.4756) = 0.31718. My formula book says N(-0.4756) = 1 - N(0.48) = 1 - 0.68793 = 0.31207. Where am I going wrong?

Only excel gives N(-0.4756) = 0.31718, how were we supposed to do this?
 
Interpolate would be my guess.. Linear interpolation gets the correct answer.

(0.44)*N(0.47)+(0.56)*N(0.48) = 0.6828192

1-0.6828192 = 0.3171808


Possibly some other interpolation is appropriate (I don't know what's in ST6), but that would be how I would get the probability if asked with no context.
 
Thanx man....but normally the tables are applied without any need to interpolate, that's why I hadn't done it. Next time I struggle it' the first thing I try.
 
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