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Microsoft® Excel® 2010: Data Analysis and Business Modeling by Wayne L. Winston

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Chapter 74. Pricing Stock Options

Questions answered in this chapter:

  • What are call and put options?

  • What is the difference between an American and a European option?

  • As a function of the stock price on the exercise date, what do the payoffs look like for European calls and puts?

  • What parameters determine the value of an option?

  • How can I estimate the volatility of a stock based on historical data?

  • How can I use Excel to implement the Black-Scholes formula?

  • How do changes in key parameters change the value of a call or put option?

  • How can I use the Black-Scholes formula to estimate a stock’s volatility?

  • I don’t want somebody changing my neat option-pricing formulas. How can I protect the formulas in my worksheet so that nobody can change them?

  • How can I ...

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