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Consider a European call option and a European put option. Both are on the same stock, both have a strike price of $130 and an expiration date in 9 months. The current price of the call option is $7.51 and the current price of the put is $11. The risk-free rate is 5% per annum for all maturities with continuous compounding, and the current stock price is $125. A dividend of $2 per share is expected in 3 months.
(a) Does the put-call parity hold?
(b) If the put-call parity does not hold, describe in detail (step-by-step) the strategy which will lead to an arbitrage profit. How much is this profit per share?
Commercial Paper Rates. What were the highest and lowest historical interest rates for commercial paper? Go to www.stlouisfed.org, find the "FRED® data" link.
explain whether the change should increase or decrease sales. (a) 2/10, net 30, (b) net 60, (c) 3/15, net 60, (d) 2/10, net 30, 30 extra.
a. What is the IRR of each alternative? b. What is the present value of costs of each alternative? Which method should be chose.
Sales are $2.5 million in 2011, $2.6 million in 2012, and $2.4 million in 2013. What is the percentage change from 2011 to 2012?
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If the forecasted exchange rate for the Pound is $1.20 for each of the next three years what is the annual cost of financing for the pound-denominated bonds?
A corporation has 17,000 shares $50 par value common stock. The board of directors declares a 4-for-l stock split when the market value of the stock is $185.
Every yearly withdrawal will be made at the start of the year. How much ought to be the estimation of his ventures at the point when Vikas turns 60, to meet this retirement need?
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