Reference no: EM132042282
The next two questions are based on the following data for a single-period binomial model.
YBM’s stock price S is $102 today. — After six months, the stock price can either go up to $115.63212672, or go down to $93.52995844. — Options mature after T = 6 months and have an exercise price of K = $105. — The continuously compounded risk-free interest rate r is 5 percent per year.
1. Given the above data, the hedge ratio and the call option’s value are given by:
a) 0.2523 for the hedge ratio and $4.1853 for the call option’s value
b) 0.3810 for the hedge ratio and $5.5557 for the call option’s value
c) 0.4810 for the hedge ratio and $5.1853 for the call option’s value
d) 0.5810 for the hedge ratio and $6.2543 for the call option’s value
e) None of these answers are correct.
2. Given the above data, the hedge ratio and the put option’s value are given by:
a) 0.2523 for the hedge ratio and $2.35 for the put option’s value
b) 0.2523 for the hedge ratio and $4.81 for the put option’s value
c) 0.5190 for the hedge ratio and $5.59 for the put option’s value
d) 0.5190 for the hedge ratio and $5.59 for the put option’s value
e) None of these answers are correct.
|
Reasonable estimate of the risk-free rate in percentage
: Given this data, what is a reasonable estimate of the risk-free rate in percentage (the return on a long-term government bond)?
|
|
This interest rate is referred to as the company
: Donald's Trumpets on average pays 8.5 percent interest on its loans. This interest rate is referred to as the company's:
|
|
Interpret importance of continually pursuing opportunities
: Interpret the importance of continually pursuing opportunities for growth within the health care marketplace, and identify expansion opportunities available.
|
|
Which security can you rule out
: Which security can you rule out, that is, you will not advise your client to invest in it?
|
|
Hedge ratio and the put option value are given by
: Given the above data, the hedge ratio and the put option’s value are given by:
|
|
Draw time line to understand what is going on
: Supersoftware, Inc. earns a total of $85 million each year to pay out to their 2 million shareholders.
|
|
How much cash money do you need to bring to the closing
: You have other closing fees of $1950 for title searches, filing fees and other assorted fees. How much cash money do you need to bring to the closing?
|
|
How much total interest will you pay
: You borrow $125,000 for 25 years at an APR of 6.5%. How much total interest will you pay?
|
|
Evaluate the value of assigning appropriate brand identities
: Evaluate the value of assigning appropriate brand identities to represent health care goods, services, and institutions. Provide support for your rationale.
|