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The next two questions are based on the following data for a single-period binomial model: A stock's price S is $60. After six months, it either goes up by the factor U = 1.28299108or it goes down by the factor D = 0.8387506. Options mature after T = 0.5 year and have strike price K = $55. A dollar invested in the money market account earns continuously compounded risk-free interest at 3 percent per year.
a. Suppose the market price of the call option is $6. Is there an arbitrage opportunity? Explain how one would trade to exploit this arbitrage.
Based on our past experience, the unit sales, variable costs and fixed cost projections are probably accurate to within plus or minus 10% What are the upper and lower bounds for these projections?
a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)?
Reagan Corp. has reported a net income of $805,700 for the year. The company's share price is $13.19, and the company has 318,290 shares outstanding. Compute the firm's price-earnings ratio.
gd has a target capital structure of 40 debt and the 60 equity. the yield to maturity on the companys outstanding bonds
You have your initial investment and the all the cashflows thereafter, he receives 375 dollars at the 4 month and 13 month. Use the NPV formula to get the NPV of the loan.
The risk free rate is 8% and the dividend yield on the index is 3%. What is the value of a sux month put option on the index with a strike price of 300 if it is a) European and b) American?
Assume (1) that NWC was operating at full capacity in 2008 with respect to all assets, (2) that all assets must grow at the same rate as sales, (3) that accounts payable and accrued liabilities also will grow at the same rate as sales, and (4) that t..
An investor uses the mean-variance criterion for selecting a portfolio of two risky assets. Asset 1 has an expected return of 20% and a variance of 4.
Assuming no changes in the firm's policies, what is the value of a share of stock if the required rate of return is 11 percent
What is the purpose of a bank reconciliation? What are the reasons for differences between the cash reported in the accounting records, and the cash balance in the bank statements?
Siobhan buys a bull spread on YMMV by going long C40 (the call struck at $40 / share) and short C45 (the call struck at $45).
Suppose that a share of Microsoft had a closing price yesterday of $90, but new information was announced after the market closed that caused a revision in the forecast of the price next year to go to $120.
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