Question:
Assume the following set of baseline parameters: The initial stock price (S0) is 45, the stock volatility is 0.30 (30% per annum), and the risk-free rate is 0.02 (2% per annum). Consider a European put option whose strike price is equal to 40, with a time-to-maturity of two years. The dividend yield is 0.04 (4% per annum). In some later tasks, you also encounter the “equivalent” American option.
Required method:
Use the finite difference method to value the (plain-vanilla) American put option. I leave it up to you to decide whether you want to use the implicit or explicit method. Motivated groups may consider using both and comparing outcomes. I also leave it up to you how many stock price- and time-steps you use in your grid (but go for more than used in the lecture). I would, however, advise you to simulate the stock price, not the log of the stock price – that’s more intuitive and thus a lot easier.
Show the calculation process in the essay and describe what you do, report your results and comment your results. Numbers should be rounded to two or three digits.
Sample Solution
s, just as standard incidental teaching, but only modified to aid the severe deficits in the children. The results yielded benefits that are similar to that of standard incidental teaching procedures because if the rapid acquisition and the promotion of generalization (McGee et al., 1983). At times it is difficult to use prompts when teaching children with ASD new skills because they can be prompt dependent; however, it is difficult to not use any prompts because they are needed to teach the skill. Incidental teaching is a procedure, which aids the children to learn the skills in a natural environment, but there also isn’t a need for continual prompts (Hart and Risley, 1975). McGee et al. (1999) showed that incidental teaching generates less prompt dependency because the teacher prompts them to elaborate on that initiation, rather than starting with a word that was chosen randomly by the teacher that does not hold the child’s interest. It is important to have at least a prompt level system in placed in order to maintain a procedure that is not prompt dependent (McGee et al., 1986). Incidental teaching also generalizes across different settings and people without prompt dependence. The study completed by McGee and Daly (2007) showed that the social phrases learned in their study by the three autistic boys were transferred across different periods and situations without prompts. According to McGee et al. (1999) the strong interest and favor to incidental teaching was due to the need to overcome the generalization issue that occurred in other behavioral interventions. As mentioned earlier, incidental teaching is a procedure is reinforcing because the child initiates the intervention based on their own interest, and receives the reinforce when the child attempts to follow the instructor’s prompt. Incidental teaching is also an intervention that promotes lasting and impactful results because it is an intervention that is early, it also can be done in a variety of settings with different people, it can have family involvement, the procedure can include peers, and it is fun for the child since it initiated by the child (McGee et al., 1999). Since it is child selected, it drives the child’s motivation, which ultimately assists the child to learn. Limitations Incidental teaching is a procedure that has shown a lot of p>
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