Loss should be entered as negative value

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1. Paul instructs his broker to buy an uncovered October 55 call option on Best Eastern at 2. If the stock of Best Eastern is trading at $23.12 at expiration, what is Paul’s realized gain or loss? Gain should be entered as a positive value. Loss should be entered as a negative value.

2. There is a stock whose dividend of $3 grows at 100% per year for 2 years, then at 40% for one year, and after that it grows at 1% per year forever. The cost of equity is 10%. How much would you pay for the stock?

3. There is a stock, which does not pay anything for 6 years. Afterward, it distributes a dividend of $2 per year for 5 years. In the 6th year, the dividend starts rising 4% perpetually. Derive the stock price.

Reference no: EM131905593

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