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You are trying to value three-month call and put options on Merck, with a strike price of 30. The stock is trading at $28.75, and expects to pay a quarterly dividend per share of $0.28 in two months. The annualized riskless interest rate is 3.6%, and the standard deviation in ln stock prices is 20%.
a. Estimate the value of the call and put options, using the Black-Scholes.
b. What effect does the expected dividend payment have on call values? on put values? Why?
assume you are an analyst evaluating mesco company. the following data are available in your financial analysis unless
ABC is planning an IPO. Its underwriters say the stock the stock will sell at $20. The direct costs will be $800,000. The underwriters will charge a 7% spread. A - How many shares must be sold to net $30 million?
One-period pricing. Recall that since stocks have really long lives, in the video we first imagined owning a stock for only one period. In this simple, yet powerful scenario, today's stock price is the PV of next year's dividend and next year's stock..
Today, you can get either 121 Canadian dollars or 1,288 Mexican pesos for 100 United State dollars. Last year, 100 United State dollars was worth 115 Canadian dollars or 1,291 Mexican pesos.
Assume the market portfolio is equally likely to increase by 30 percent or decrease by 10%. Compute the beta of a firm that goes up on average by 43 percent when the market goes up and goes down by 17% when the market goes down?
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millers metalworks inc. has a total asset turnover of 2.5 anda net profit margin of 3.5. the total debt ratio for the
Sometimes it is not clear if a particular security is a debt or equity. Explain the basic difference between debt and equity.
q.suppose that standard deviation of returns on shares of share at 2 various companies is exactly similar. does this
An investment will pay you $50,000 in 11 years. If the appropriate discount rate is 7.7 percent compounded daily, what is the present value?
John has just begun investing, & one of his friends was mentioning how he could use short selling as an effective method to drive up his returns when market started to go down.
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