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The shares of DCB Bank are currently valued at $27 and they have a volatility of 26% pa. The risk free rate is 6% pa. You many find this table showing the values of the standard normal cumulative distribution function useful.
a) Calculate the price of a European call option on these shares, with strike price $23 and a term to expiration of 10 years. Give your answer in dollars and cents to the nearest cent.
Price of call option = $
DCB bank have just announced that a dividend of $0.74 will be paid in 2 years time and an additional dividend of $1.22 will be paid in 6 years time.
b) Taking this new information into account, calculate the adjusted price of the call option. Give your answer in dollars and cents to the nearest cent and assume that the time between the ex-dividend date and actual payment of the dividend has a negligible effect.Adjusted price of call option = $
A 10 year, 6% semiannual, $1,000 bond was issued and immediately the current market rates rose to 8% (compounded semi annually). How much could that bond be sold for today?
Plunkett Gym Equipment, Inc. has a $1,000 par value convertible bond outstanding that can be converted into 25 shares of common stock. The common stock is currently selling for $34.75 a share, and the convertible bond is selling for $960. a. What is ..
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1.If you deposit $3,000 in a bank account that pays interest of 3.5%, compounded annually, how much will you have in the account after 9 years? Round to 2 decim
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