Reference no: EM132979930
Question - A one-step binomial tree is used to model the impact of an important announcement on the stock price of Company XYZ. There is a 50% chance that the announcement will be positive for the company. The Company does not pay dividends.
Current stock price = K20
Stock price after good news = K30
Stock price after bad news = K15
Time period = 3 months
Risk-free rate (continuous compounding) = 5 %
a) Calculate the price of a 3-month call option on the Company stock with strike price equal to K22.
b) Suppose you are a market-maker in the Luse Index forward contracts. The Luse Index spot price is K1, 100 and the annual risk free rate is 5%.
i. Calculate the forward price for delivery in 9 months.
ii. If the actual forward price is K1,122, how can you take advantage on this situation?
iii. What are the problems that you will face in taking advantage of the situation?
How much is the gain or loss on sale to be recognized
: If on April 1, 2021, half of the trading securities are sold for P3,225,000, how much is the gain or loss on sale to be recognized for 2021
|
Explain in an oral presentation underlying pathophysiology
: Explain in an oral presentation the underlying pathophysiology of ONE of Maddis clinical manifestations and Describe ONE high priority nursing intervention
|
Impact of human resources management activities
: Critically discuss the impact of Human Resources Management activities on the Organisational Performance. The Candidate must justify how the chosen organization
|
What would be the reduction in singer equity
: Singer Corporation owned 900,000 shares of Writer Corporation. What would be the reduction in Singer's equity as a result of the above transactions
|
Calculate the price of a three-month call option
: Calculate the price of a 3-month call option on the Company stock with strike price equal to K22. Calculate the forward price for delivery in 9 months
|
What was the net profit on this option to the speculator
: The spot rate at expiration was $0.48. Assume there are 62,500 units in a Swiss franc option. What was the net profit on this option to the speculator
|
Explain what it means in terms of natural numbers
: Provides a sequence of most general unifiers, one per resolution step, and when these are composed, in the order they were generated, you have a substitution
|
What is the profit or loss
: Use the profit formula to determine whether Benjamin's Backpacks makes a profit or loss if it sells 10 backpacks. What is the profit or loss
|
Determine whether g is valid or not
: Determine whether G is valid or not. Either provide a proof that uses resolution to show validity, or else specify an interpretation that makes G false
|