Identical call option on the same stock

Assignment Help Finance Basics
Reference no: EM131041471

A European put option on a stock priced at $50 has a price of $3. The present value of the exercise price of the option is $49. The stock is not expected to pay a dividend. What must be the price of an identical call option on the same stock?

Reference no: EM131041471

Questions Cloud

Prepare a condensed multiple-step income statement : Prepare a partial income statement for Stacy beginning with income before income taxes. The corporation had 5,000,000 shares of common stock outstanding during 2012.
Prepare the journal entries to record transactions of sage : Required: Prepare the journal entries to record the transactions of Sage Ltd up to and including that which took place on 28 March 2016. Show all relevant dates, narrations and workings
Theoretical value of the american put : The risk-free rate is 4 percent. Assume a two-period world. What is the theoretical value of the American put with an exercise price of 105?
Describe at least two alternatives to oil : Describe at least two alternatives to oil that are currently available and discuss the barriers that keep these alternatives from replacing oil as our primary means of energy?
Identical call option on the same stock : A European put option on a stock priced at $50 has a price of $3. The present value of the exercise price of the option is $49. The stock is not expected to pay a dividend. What must be the price of an identical call option on the same stock?
Information pertaining to the hotel services and guest : Christy also collected information pertaining to the hotel's services and guest rooms. What information can Christy learn from these questions?
Is the demand for pizza relatively more elastic or inelastic : What type of market structure characterizes the pizza industry? How do you suppose that Mamma Mia's can charge so much more per pizza than Fast Freddy's does?
What roles were women expected to play in roman society : What roles were women expected to play in Roman society? To what extent did women challenge those expectations? Does the role of women shift between the Republic and Empire? How do different types of evidence give us different ideas about the role..
Ti improve the level of service provided by the hotel : What additional information woukd be helpful ti improve the level of service provided by the hotel? And how can this additional information be collected?

Reviews

Write a Review

Finance Basics Questions & Answers

  Afb inc requires an investment in equipment of 600000 to

afb inc. requires an investment in equipment of 600000 to replace existing equipment. the existing equipment will

  A few months have now passed and air jet best parts inc is

a few months have now passed and air jet best parts inc. is considering the purchase on a new machine that will

  What is the expected rate of return on a stock

The risk-free rate of return is 3.0 percent and the market risk premium is 10 percent. What is the expected rate of return on a stock with a beta of 1.2?

  Computation of total interest on the investment

Computation of total interest on the investment and how much total interest income would the money market lender receive

  External market for output of production division

The demand function for the final product is QD = 100 - P.  Assume that there is no external market for the output of the production division.

  Analyzing a portfolio

You have $100,000 to invest in a portfolio containing Stock X, Y and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 13.5 percent and that has only 53 percent of the risk of the ..

  Which way of financing is the most expensive

Which way of financing is the cheapest (cost a firm least)? Which way of financing is the most expensive (cost a firm most)? Please rank these four ways of financing from the cheapest to the most expensive and discuss why.

  What is jack weighted average cost of capital

The U.S. Treasury bill is yielding 6 percent and the market risk premium is 9 percent. Jack's tax rate is 35 percent. What is Jack's weighted average cost of capital?

  Compare stability and variability in earnings

Compare stability and variability in earnings

  Make financial decisions

What exactly does this mean? Examine financial resources to help you make financial decisions (explain your steps and what you examined).

  How could iger and his top management

What challenges do you think Disney might face in doing business in Russia? How could Iger and his top management team use planning to best prepare for those challenges?

  What is effective after-tax interest rate expense for firm

A firm incurs $70,000 in interest expenses each year. If the tax rate of the firm is 20%, what is the effective after-tax interest rate expense for the firm?

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