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Questions -
Q1. Imagine that a stock is currently trading for $100. The price is expected to go up to $120 or down to $90, in the next year. No other possibilities exist. Assuming the risk- free rate is 10% construct a binomial tree and value a call option on this stock with an expiration of 6 months, and a strike price of $100. Please show all of your work.
Q2. You are considering purchasing 500 call options on the common stock of the big candy store, Inc. The stock is currently trading at $37.10 per share. The 3-month option can be purchased for $2.07 per share, and has an exercise price of 41.00. Assuming the stock is trading at $42.11 at the time of expiration of the option, what is the payoff? What is the profit / loss?
Q3. A. Given the following scenarios based on ABC, Inc. common stock, calculate the Expected Return, Variance, and Standard Deviation of the returns.
Scenario
Probability
HPR(%)
Server recession
0.15
-27
Mid recession
-11
Normal growth
0.40
10
Boom
0.30
21
B. Assuming we create a portfolio consisting 40% of the above stock. And 60% of bonds with the following possible return. Calculate The Expected Return. Variance, and Standard deviation of the portfolio.
-9
12
8
-5
Compute the issue price of a $1,500,000 bond issue and prepare the journal entries for the issuance and first years' interest payments (use the effective interest method). Assume the bonds are paid semiannually (June 30 and December 31).
gruner company produces golf discs which it normally sells to retailers for 6.89 each. the cost of manufacturing 17300
Preppy Co. makes and sells a single product. The current selling price is $30 per unit. Variable costs are $21 per unit, and fixed expenses total $90,000 per month. Sales volume for July totaled 12,000 units.
utease corporation has many production plants across the midwestern united states. a newly opened plant the bellingham
Immediately after the sale, the seller paid off the loan to TrustOne Bank. What is the effect of the sale and the payoff of the loan on the accounting equation?
the adjustment at end of calendar year, and the repayment of the note
Define group auditors and component auditors. What issues are introduced when component auditors examine a division, subsidiary.
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Explain the impact of accounting transactions in financial statements. Discuss the components and use of financial analysis
Of the following process costing steps, which must be done last? A. Compute the equivalent units of production. B. Compute the costs per equivalent unit of production C. Measure the physical flow of resources. D. Identify the product costs to account..
Question - Measures of Performance and Financial Leverage. Compute the Asset turnover performance measurement ratios for 2017
What accounts are currently down after the new regulations were passed?
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