Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
As an option trader, you are constantly looking for opportunities to make an arbitrage transaction (i.e., a trade in which you do not need to commit your own capital or take any risk but can still make a profit). Suppose you observe the following prices for options on DRKC Co. stock: $3.18 for a call with an exercise price of $60, and $3.38 for a put with an exercise price of $60. Both options expire in exactly six months, and the price of a six-month T-bill is $97.00 (for face value of $100).
a. Using the put-call-spot parity condition, demonstrate graphically how you could synthetically recreate the payoff structure of a share of DRKC stock in six months using a combination of puts, calls, and T-bills transacted today.
b. Given the current market prices for the two options and the T-bill, calculate the no-arbitrage price of a share of DRKC stock.
c. If the actual market price of DRKC stock is $60, demonstrate the arbitrage transaction you could create to take advantage of the discrepancy. Be specific as to the positions you would need to take in each security and the dollar amount of your profit.
Mr. Meyers wishes to know how many shares are necessary to elect 5 directors out of 9 directors up for election in the Austin Power Company.
Floor planning is best described as
The Graber Corporation’s common stock has a beta of 1.2. If the risk-free rate is 4.3 percent and the expected return on the market is 13 percent, what is the company’s cost of equity capital?
Using the expectations theory, what is the yield on a 1-year bond, one year from now? Calculate the yield using a geometric average.
During the 12 months she owned the stock, she received $136 in dividends. Calculate Wanda’s total return on this investment.
The Florida lottery agrees to pay the winner $284,000 at the end of each year for the next 20 years. What is the future value of this prize if each payment is put in an account earning 0.08?
What is the annual percentage interest rate for the loan?
Describe a hypothetical, community bank with approximately 30 employees. The bank has only one location—a 2,800 square foot building located downtown housing their 30 employees. Describe the relevant characteristics of this small bank in depth. For t..
Which of the following tend to reinforce the argument that the financial markets are efficient?
Suppose the Digby company begins to compete through good designs, high awareness and easy accessibility for their existing products, what strategy would they be implementing? Select: 1 Niche differentiation Broad differentiation Broad cost leader Nic..
A company is expected to have free cash flows of $0.75 million next year. The weighted average cost of capital is WACC = 10.5%, and the expected constant growth rate is g = 6.4%. The company has $2 million in short-term investments, $2 million in deb..
The stockholder's equity accounts of a corporation on January 1, 2015, were as follows: As of Dec.31, 2015, what is the average selling price of the preferred stock? How many shares of common stock are outstanding as of December 31, 2015? What is tot..
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd