Price of put option necessary to guarantee your sales price

Assignment Help Financial Management

Reference no: EM131524290

You own a lot in Key West, Florida, that is currently unused. Similar lots have recently sold for $1, 270,000. Over the past five years, the price of land in the area has increased 7 percent per year, with an annual standard deviation of 33 percent. You have approached a buyer and would like the option to sell the land in 12 months for $1, 420,000. The risk-free rate of interest is 5 percent per year, compounded continuously.

What is the price of the put option necessary to guarantee your sales price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131524290

Questions Cloud

Firm can pay for the project and still earn required return : What is the most the firm can pay for the project and still earn its required return?

Create a layout report of your selected company : Create a layout report of your selected company that fulfills the critical elements below. Justify your reasoning for the important points mentioned

Fundamental advantages and disadvantages of using software : Discuss the fundamental advantages and disadvantages of using software as a service (SaaS) within organizations.

Explain unauthorized disclosure of data or information : Explain Unauthorized disclosure of data or information. Summarize your findings in at least 300 words. Be sure to provide a link to the article.

Price of put option necessary to guarantee your sales price : What is the price of the put option necessary to guarantee your sales price?

Evaluate and describe any cultural considerations : Examine the major theoretical approaches studied in the class so far (psychodynamic, behavioral, learning, trait and type, and humanistic).

Basic structure of this database : Describe the basic structure of this database (i.e. is there more than one entity/table?, how many fields are there?, what are examples of these fields? etc.).

Draw a decision tree and solve the manager problem : A factory manager must decide whether to stock a particular spare part. The part is absolutely essential to the operation of certain machines in the plant.

Briefly describe trends in the market environment : Identify and briefly describe four trends in the macro-market environment that will have or recently had an influence on the selected industry.

User Account

All Pages