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A call option on Jupiter Motors stock with an exercise price of $75 and one-year expiration is selling at $3. A put option on Jupiter stock with an exercise price of $75 and one-year expiration is selling at $2.50.
A) If the risk-free rate is 2% and Jupiter pays no dividends, what should the stock price be?
B) Is there an arbitrage opportunity if the stock price is $73? If so, how to exploit it?
Use the cost benefit analysis to recommend to Smith whether Sun Gas should proceed will the Web based ordering system. Give your reasons, showing supporting calculations.
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_____ are the reserves the Fed requires the bank to hold.
Sam’s Smokehouse wants to recapitalize and repurchase shares. The company currently has 900 shares (and no debt), but is thinking about borrowing $9,000 at 10% per year and buying back 150 of those shares. What is the indifference point between the t..
Indicate the amount of the discount or premium at which the foreign currency was original sold in the foreign currency market.
A bond matures in 30 years, has a 20 year duration and a yield to maturity of 9.32%. The change in the level of the market interest rate is 0.47%. What is the modified duration and the percentage change in price? What is the tax-equivalent yield of a..
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In equipment acquisition proposal, MKBK Enterprises has worked out deal on interest rate with vendor. Determine the monthly payment for the first 30 months.
Akeya Equipment has 120,000 non-callable semiannual bonds outstanding with a 8 percent coupon interest and par value of $1,000. The bonds have 15 years to maturity and sells for 95 percent of the par. The company’s average tax rate is 35%. What is th..
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