Find pseudo-american option value

Assignment Help Financial Management

Reference no: EM131925266

XYZ Corp. will pay a $2 per share dividend in 2 months. Its stock price currently is $84 per share. A call option on XYZ has an exercise price of $78 and 3-month time to expiration. The risk-free interest rate is 0.6% per month, and the stock’s volatility (standard deviation) = 20% per month. Find the pseudo-American option value. (Hint: Try defining one “period” as a month, rather than as a year.)

Reference no: EM131925266

Questions Cloud

What is the quarterly expected return for investment : You own two investments, A and B, that have a combined total value of 124,754 dollars. Investment A is expected to make its next payment in 1 month.

Calculate monthly payment if you lease civic : Calculate your monthly payment if you lease the Civic for 24 months and make a $3,000 down payment.

What would be the bond price five years from now : A 25 year, $1,000 par value bond has an annual coupon of 8.5%. The bond currently sells for $875. If the yield to maturity remains at its current rate.

Compute the level of the firm accounts receivable : ABC has Days Sales Outstanding (DSO) of 10.1 days. Annual sales are expected to be 5,545,000. Using a 365 day year, compute the level of the firm's accounts.

Find pseudo-american option value : The risk-free interest rate is 0.6% per month, and the stock’s volatility (standard deviation) = 20% per month. Find the pseudo-American option value

Calculate the required return on microstrategy stock : Calculate the required return on MicroStrategy stock using the Capital Asset Pricing Model (CAPM) Security Market Line. Please show your work.

What is the real rate of return for a us long-term bond : Assume that the inflation rate during the last year was 1.94 percent. US long-term bonds had the nominal rates of return of 5.57 percent.

How many after-tax dollars will be accumulated : If 30,000 after-tax dollars are invested at 7% in a single-premium tax-deffered annuity, how many after-tax dollars will be accumulated in 20 years?

How much is olympia monthly lease payment on the tractor : The annual interest rate is 6%. How much is Olympia’s monthly lease payment on the tractor?

User Account

All Pages