Calculate effective interest rate

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1. One year ago, while the stock was deli get for $19.80, an option on 1 share of McDermott stock sold for $2.54. The option was for one year with an exercise price of $20.00 and the option expires today. Today the stock is selling for $23.93. Over the life of the contract, what is the total profit or loss for one share for long call and short put.

2. Describe the ways by which the savings and loan (S&L) scandals represented collusion between organized crime and legitimate commerce. Provide your solution and its rationale for preventing this from happening in other businesses.

3. A firm pays a stated interest rate of 8.5% on a $550,000 loan for one year. They are also required to keep a 15% compensating balance. The firm normally keeps an $85,000 balance in their checking account. Calculate the effective interest rate.

Reference no: EM132054731

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