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The current stock price is at RM8 with a volatility of 0.35. You buy a put option with the exercise price of RM7.5 and the time to expiration is 3 months from now. The risk-free interest rate is 2%. Answer the following questions.
(i) Use Black-Scholes option pricing model to compute the theoretical value of the put.
(ii) If the put price is RM4.5, is it under-or overpriced?
(iii) Discuss the two most critical assumptions made under Black Scholes Option Pricing model.
list at least five ways that a developer may attempt to reduce the risks of the permitting
What is marginal weighted average cost of capital and how does it impact the decision to expand your division?
Molineux corp. has market value of equity at $20 billion, and its debt book value is $4 billion. Its cost of equity is 12%, and pretax cost of debt of 7%.
What is the market rate of return on this stock?
Grant Corporation's stock is selling for $40 in the market. The company's beta is 0.8, the market risk premium is 6%, and the risk-free rate is 9%. The previous dividend was $2 and dividends are expected to grow at a constant rate. What is the sto..
Describe the three steps involved in evaluating credit applicants.
The investor demands 12% rate of return for similar risk investment. a) Determine the price at which you would expect the common stock of Eli to sell?
Given this information what would PPP forecast the future spot rate of baht/$? Answer using two decimal places.
Joe Inc most recent dividend was $3.00 per share (d0). The dividend is expected to grow at a rate of 6%. The risk free rate is 5% and the return on the market is 9%. If the company's beta is 1.5, what is the price of the stock today?
What are the differences between the indirect and direct methods of preparing the statement of cash flows? Do you agree with the FASB that the direct method is preferred? Why, or why not?
Building a Case Study Analysis on Franchising, Find a minimum of three news articles discussing this issue, write a case study report that has three main parts:
if you have to choose between 2 equally risk annuities each paying 5000 per year for 8 years. one is an annuity due
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