Calculate the present value of x in example

Assignment Help Finance Basics
Reference no: EM132651295

Data: S0 = 100; X = 110; 1 + r = 1.1. The two possibilities for ST are 150 and 80. Calculate the value of a call option on the stock with an exercise price of 110. (Do not use continuous compounding to calculate the present value of X in this example, because the interest rate is quoted as an effective per period rate)

 

 

 

Reference no: EM132651295

Questions Cloud

What is cost of capital : 1. What is "cost of capital?" 2. How do firms use their "cost of capital" when evaluating potential capital
Explain the five methods of capital budget projects : 1. Explain the two methods of identifyingevaluating (in depth please) capital budget projects
Prepare the journal entries using the full - cost method : In 2019, development costs of $30 million are incurred at Labasa site (to be written off on a production basis). Prepare the journal entries
Find estimate of wacc : If its corporate tax rate is 37%?, what is your estimate of its? WACC?
Calculate the present value of x in example : Calculate the value of a call option on the stock with an exercise price of 110
Calculate the value of a european call option : Calculate the value of a European call option on the index with an exercise price of 60
Should the credit memo be treated as income : A credit memo for $1,000,000 will be granted to GrassChopper. Should the credit memo be treated as income or as an adjustment of inventory cost
What is fintech : What is fintech, and how has it evolved over time? Who are the major players? What conditions have contributed to the emergence of fintech?
Find implied volatility based on the option price : The risk-free interest rate is zero. Is the implied volatility based on the option price more or less than .30? Explain your answer.

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the investment value to mcdonald

Suppose a certain site has a McDonald's restaurant on it (equipped with the usual golden arches, etc.). As a McDonald's, the site can generate $50,000 per year.

  The basic source document for direct manufacturing

1 when indirect materials are requisitioned the account is increased.amaterials controlbaccounts payable

  Which option has the highest risk and lowest risk

Stock ABC does not have any traded options and is trading at $25 now. You believe the stock will decrease by 20% over the next six months.

  What is the given investments internal rate of return

An investment of $1,000 today will return $2,000 at the end of 10 years. What is its internal rate of return? An investment of $1,000 will return $500 at the end of each of the next 3 years. What is its internal rate of return?

  How much will you accumulate after 18 years of investing

How much will you accumulate after 18 years of investing? Round to two decimal places (Ex. $00.00)

  What is the approximate rate of return

What is the approximate rate of return (or yield) on this investment for the year. (You can ignore any commissions or taxes.)

  Workplace policies and procedures in an organisation

What is the purpose of workplace policies and procedures in an organisation?

  Calculate waccs based on book,

Bolster Foods' (BF) balance sheet shows a total of $25 million long-term debt with a coupon rate of 8.50%.

  If the apr of a savings account is 48 and interest is

if the apr of a savings account is 4.8 and interest is compounded monthly what is the approximate apy of the account?a.

  What is uare''s net income

If UARE, Inc. has sales of 11,300, total assets of 12000, a debt to equity ratio of 1.3 and a return on equity of 15 percent, what is UARE's net income?

  Anticipated down payment and monthly payments

She feels that hiring both is a waste of her money and time. What advice can you give to Nancy?

  When viewing the terms special returns or abnormal returns

When viewing the terms "special returns" or "abnormal returns," we know this can refer to _____. Legal methods for attempting to profit through mergers and acquisitions include all of the following, except identifying _____.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd