Call option-what should the stock price be

Assignment Help Financial Management
Reference no: EM131561964

A call option on Jupiter Motors stock with an exercise price of $80 and one-year expiration is selling at $2. A put option on Jupiter stock with an exercise price of $80 and one-year expiration is selling at $.5. If the risk-free rate is 8% and Jupiter pays no dividends, what should the stock price be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Stock price $   

Reference no: EM131561964

Questions Cloud

Find four ordered pair solutions by completing the table : Given the equation below, find four ordered pair solutions by completing the table, showing all work in the space below.
Retained earnings valued with bond-yield-plus-premium mehod : Carling Corporation will raise $1,000,000 to finance an expansion. What is the cost of using Retained Earnings valued with the Bond-Yield-Plus-Premium Method.
What is the price-earnings ratio and market-to-book ratio : What is the price-earnings ratio? What are the dividends per share? What is the market-to-book ratio at the end of 2015?
What is the name of the country you are researching : Offer a brief description about your country to indicate its geographical location and topography. What is the name of the country you are researching
Call option-what should the stock price be : A call option on Jupiter Motors stock with an exercise price of $80 and one-year expiration is selling at $2. what should the stock price be?
Distribution of sample means : Use a real world scenario to explain why it makes sense the variation decreases as the sample size increases.
What is the surface area of the cup : A paper cup is in the shape of a cone as shown in Fig.
What is risk-free interest rate expressed : What is the risk-free interest rate expressed as an effective annual yield?
What is a favorible pico question for this research question : "Do effective health mechanisms help in the prevention of falls and injuries among the elderly Patients'

Reviews

Write a Review

Financial Management Questions & Answers

  Uses discounted cash flow analysis

Joe currently makes a $75,000 annual salary at his job and knows that he won't get fired. He was recently accepted into an MBA program and earned a full tuition scholarship. Suppose Joe will earn $100,000 per year for the first 3 years after his MBA ..

  Weighted average cost of capital-coupon rate-dividend

Calculate Company D’s weighted average cost of capital, given the following information: (a) Tax Rate: 21%, (b) Average Price of Outstanding Bonds: $1,125, (c) Coupon Rate (Debt): 6%, (d) NPER (Debt): 5,

  The standard deviation of the rate of return on investment

What is the standard deviation of the rate of return on this investment?

  Annual return mean and standard deviation

Your portfolio allocates equal funds to the DW Co. and Woodpecker, Inc. DW Co. stock has an annual return mean and standard deviation of 15 percent and 38 percent, respectively. Woodpecker, Inc., stock has an annual return mean and standard deviation..

  Wedding and maternity clothing manufacturer

Great Expectations, a wedding and maternity clothing manufacturer, has a cost of equity of 16 percent and a cost of preferred stock of 14 percent.

  Calculate the standard deviation of stock portfolio values

It is June and a fund manager has a portfolio worth $20 million with a beta of 1.4. The manager is concerned about the performance of his stocks in August (2 months from now) and plans to use September futures contracts on the S&P 500 to hedge the ri..

  What is the value of galts equity using the apv method

Galt Industries is expected to generate free cash flows of $24 million per year. Galt has permanent debt of $80 million, a corporate tax rate of 40%, and an unlevered cost of capital of 12% and its cost of debt capital is 6%. What is the value of Gal..

  What changes in the regulation of mutual funds

What changes in the regulation of Mutual funds have been adopted by the regulators in response to the abuses and scandals in this industry?

  Yields on bonds of similar risk are expected

A bond has a face value of 10000 and a coupon rate of 6% with an original maturity of 10 years with six years to maturity left. If yields on bonds of similar risk are expected to be 6.6% in two years what will the value of the bond be then?

  Directly increase cash shown on firms balance sheet

Which of the following actions are most likely to directly increase cash as shown on a a firm's balance sheet?

  Each situation can be expressed as a linear cost function

Assume that each situation can be expressed as a linear cost function. Find the cost function in each case.

  The default and liquidity premiums

Drongo Corporation's 2-year bonds yield 6.81%. The real risk-free rate is 2.7%. The maturity risk premium is estimated to be 0.09%(t-1), where t is equal to the time to maturity. The default and liquidity premiums for Drongo's bonds total 1.27% and a..

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