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Question 1: The current price of Natasha corporation stock is $6. In each of the next two years, this stock price can either go up by $2.50 or go down by $2.00. The stock pays no dividends. The one-year risk free rate is 3% and will remain constant. Using the binomial model, calculate the price of a two-year call option on Natasha stock with a strike price of $7.
Question 2: Rebecca is interested in purchasing a European call on a hot new stock, UP, Inc. the call has a strike price of $100 and expires in 90 days. The current price of UP
stock is $120 and the stock has a standard deviation of 40% per year. The risk free interest rate is 6.18% per year. d1=ln[S/PV(K)]/σT1/2+ σT1/2/2 and d2= d1- σT1/2
Using the Black-Scholes formula to compute the price of the call.
Question 3: Use put-call parity to compute the price of the put with the same strike and expiration date.
Matthew wants to take out a loan to buy a car. He calculates that he can make payments of $4000 per year. If he can get a five - year loan with an interest rate of 7.5%, what is the maximum price he can pay for the car?
Explain this article and discuss your opinion on the impact of increased rates on stocks, bonds, housing, and the overall economy. (only a brief paragraph or two).
Set up the fund of semi-annual payments to be compounded semi-annually to accumulate the some of $100,000 after 10 years at 8 percent annual rate (20 payments). Find out how much the semi-annual payment should be. (round to whole numbers.)
If Airbus decides to hedge using put options on U.S. dollars, what would be the 'expected' euro proceeds from the American sale? Assume that Airbus regards the current forward exchange rate as an unbiased predictor of the future spot exchange rate..
What's the taxable equivalent yield on a municipal bond with a yield to maturity of 4.3 percent for an investor in the 28 percent marginal tax bracket?
Froogle Enterprises is evaluating an unusual investment project. What makes the project unusual is the stream of cash inflows and outflows shown.
bva inc. has two bond issues outstanding each with a par value of 1000. information about each is listed below. suppose
The Wagner Company made the following expenditures for research and development early in 2014: $80,000 for materials, $100,000 for contract services, $80,000.
What is the discounted payback period at an interest rate of 12.8%? Enter your answer as an integer. If the project never pays itself back, enter a 0."
What is the journal entry to retire bonds at maturity? What does it mean when a company calls a bond?
Calculate the bank's risk-weighted assets before and after the agreement. Problems 4 through 11 relate to a sequence of transactions at OldhatFinancial.
Since analysts estimate Paccar will have an 8.8 percent growth rate, what is its required return?
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