Find the price of one ordinary put option on the stock

Assignment Help Financial Management
Reference no: EM131892371

The stock of GS pays no dividends. The stock currently trades at $54 per share. An up-and-in call with strike $55 and barrier $60 has a price of $3.04, and an up-and-out call with strike $55 and barrier $60 has a price of $1.32. The options expire in 2 months, and the annual continuously compounded interest rate is 0.03. Find the price of one ordinary put option on the stock of GS with strike price of $55 and time to expiration of 2 months. 

Reference no: EM131892371

Questions Cloud

Participate in employer-sponsored retirement savings plan : Do you participate in an employer-sponsored retirement savings plan?
Resulting financial impact on the air transportation : Consider the economic downturn in the United States over the past few years and the resulting financial impact on the air transportation industry.
Examine the current increase in longevity within kingdom : Examine the current increase in longevity within Kingdom of Saudi Arabia. What impact will this aging of nation have on current and future healthcare system?
Failure modes and effects analysis : What is the failure modes and effects analysis (FMEA) method, discuss the potential outcomes when using a cell phone to contact 911 emergency
Find the price of one ordinary put option on the stock : Find the price of one ordinary put option on the stock of GS with strike price of $55 and time to expiration of 2 months.
Would you follow your partners instructions : An hour passes, and you havent made any progress. Your partner unplugs all of the recording equipment and asks you to leave the room.
Explain why the critical path is important in project : Explain why the critical path is important in project management. Describe the life cycle of a project you have done.
Beta and required rate of return : If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
Explain why doubling the capacity of a bottleneck : Explain why doubling the capacity of a bottleneck may not double the system capacity?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the companys expected rate of return

The Fun Company's stock has a 50% chance of producing a 23% return, a 30% chance of producing a 20% return and 20% chance of producing a -29% return. What is the company's expected rate of return?

  Explains why the standard deviation of the portfolio

Which fo the following facts explains why the standard deviation of the portfolio is less than the standard deviation of either of the two stocks that make up the portfolio?

  Earnings and stock price tend to move up and down

Firm M's earnings and stock price tend to move up and down with other firms in the S&P 500, while Firm W's earnings and stock price move counter cyclically with M and other S&P companies. Based on the above information, here is a statement “If M and ..

  Compute the total cost with the forward rate

Intel Corporation has Euros 100 million payables due in 90-days.  The current spot exchange rate is $1.2025/Euro. The 90-day forward rate is $1.2100/Euro. If Intel wants to hedge its payables in Euro 100 million, suggest a suitable hedging strategy u..

  Determine which is the better investment

Determine which is the better investment: 6.45% compounded monthly or 6.63% compounded semi annually. The 6.63% semi annually investment gives an effective rate of %.

  What is the firms after-tax cost of debt

If the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt?

  Comparing two different capital structures-equity under plan

OOke Co. is comparing two different capital structures. Plan I would result in 8,500 shares of stock and $402,500 in debt. Plan II would result in 12,000 shares of stock and $280,000 in debt. The interest rate on the debt is 11 percent. The all-equit..

  Can ferd make an arbitrage profit on this situation

Ferd Rumpledink at UBS now observes the data below for the USD and the CHF. He still has 10,000,000 USD or the CHF equivalent (at the current spot rate) to invest for 180 days. Can Ferd make an arbitrage profit on this situation?

  Find the terminal stock price using benchmark pe ratio

find the “terminal” stock price using a benchmark PE ratio.

  What is the difference in the maturity risk premiums

What is the difference in the maturity risk premiums (MRPs) on the two securities; that is, what is MRP5 - MRP3?

  What is the length of the firms cash conversion cycle

Negus Enterprises has an inventory conversion period of 73 days, an average collection period of 49 days, and a payables deferral period of 20 days. Assume that cost of goods sold is 80% of sales. What is the length of the firm's cash conversion cycl..

  What is the economic ordering quantity

Diagnostic Supplies has expected sales of 194,400 units per year, carrying costs of $6 per unit, and an ordering cost of $8 per order. What is the economic ordering quantity? What is the average inventory? What is the total carrying cost?

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd