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The exercise price on one of ORNE Corporation's call options is $25 and the price of the underlying stock is $29. The option will expire in 35 days and is currently selling at $5.50. a. Calculate the option's exercise value? What is the significance of this value? b. Why is an investor willing to pay more than the exercise value for the option? c. If the price of the underlying stock changes to $33 per share, will the market value of the option increase, decrease, or remain the same? Why d. If Orne Corporation had issued a put option (instead of the call), would its value increase, decrease, or remain the same if the price of the underlying stock increased? Why?
Assume a project has the following expected cash flows: What is the project’s payback (payback period)?
How much should you deposit today in order to withdraw $5,000 for next 5 years? Your first withdraw will start 6 year from now and your deposit will earn 4% interest.
What is the capital conservation buffer and what impact will it have on bank performance and risk?
A $2,000 11% ten-year bond has semiannual coupons and is sold to yield 5.2% convertible semiannually. The discount on the bond is $83.28. Find the redemption amount.
1. the eurusd spot exchange rate is quoted as 1.32250-1.32267. how many eur are needed to purchase 100000000 usd on
For month ended 6/30/X1, there were 1,531 of direct labor hours incurred - Explain how would I begin creating a variable costing income statement and absorption statement?
Can a trader earn covered interest arbitrage profits? If not, explain why not. If possible, determine what the likely directional impact on each rate would be if arbitrageurs took advantage of the profit potential.
Given the following, compute the cost of internally generated equity (retained earnings) using the DCF approach: The par value of the firms outstanding 20 year 8% annual coupon debt is 1,000 and the debt currently has a market value of 800.
suppose you owned a portfolio consisting of 250000 worth of long-term u.s. government bonds.a. would your portfolio be
Whispering Pines, Inc. is all-equity-financed. The expected rate of return on the shares is 12%. Calculate the opportunity cost of capital for an average-risk Whispering Pines investment. Calculate the company’s weighted-average cost of capital at th..
Suppose that we interview a group of investors who chose to invest 40% of their portfolio in small US stocks and 60% in the risk-free asset. We then ask them which asset from (2) that they prefer. Most answer that they prefer. what does this imply ab..
Why is the capital budgeting decision crucial and important for a firm? State why the capital budgeting errors are so costly? Suntex Berhad is considering a major expansion of its production line and has estimated the following free cash flows associ..
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