Rubinstein binomial tree to price european call option

Assignment Help Financial Management
Reference no: EM131974280

1. Use a two-period Cox-Ross-Rubinstein binomial tree to price a European call option with the following terms: strike price is $20; expiration is in 8 months; the current price of the stock is $19; the stock’s volatility is 10%; continuous dividend rate is 2%; risk-free interest rate is 6%.

2. You bought a new car with financing of $50,000. They allow you to pay in monthly installments of $1,528 for three years. What is the effective annual rate (EAR) that they are charging you?

3. A piece of newly purchased industrial equipment costs $954,318.00 and is classified as a seven-year property under MACRS. What is the book value of this piece of equipment at the end of year 3?

Reference no: EM131974280

Questions Cloud

What is PV of growth opportunities : What is the PV of growth opportunities?
The price of telecom stock : What will be your rate of return if the price of Telecom stock goes up by 10% during the next year?
Company restaurants specialize in exotic main dishes : The company’s restaurants specialize in exotic main dishes, using ingredients such as alligator, buffalo, and ostrich.
What is the expected capital gain in percentage terms : If an investor were to buy IBX stock now and sell it after receiving the $2.15 dividend a year from now, what is the expected capital gain in percentage terms?
Rubinstein binomial tree to price european call option : Use a two-period Cox-Ross-Rubinstein binomial tree to price a European call option with the following terms:
Qualified to get mortgage loan : You just found the house of your dreams. The price of the house is ?$200,000. You have been qualified to get a mortgage loan with AAA Bank.
What is weighted average cost of capital : The Black Bird Company plans an expansion. what is the weighted average cost of capital?
Housekeeping expense difference when converted to percentage : The table in the text lists various general services expenses. What is the housekeeping expense difference when converted to a percentage?
What is the present value of these future salary payments : If the discount rate is 9%, what is the present value of these future salary payments?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the market value per share of common stock

what is the market value per share of DCI’s common stock?

  Does the company use more or less debt

Does the company use more or less debt? Is the company’s use of assets more or less efficient than the industry?

  Present value of the net cash flow

A company XYZ is considering manufacturing a product in space. The project lifetime is 10 years and has the following consecutive phases: Phase 1 (years 1 to 3): The engineering design and development requires 3 years. what is the present value of th..

  What is the future value of your inheritance at retirement

You believe you will need to have saved $428,000 by the time you retire in 30 years in order to live comfortably. You also believe that you will inherit $103,000 in 5 years. If the interest rate is 6% per year, what is the future value of your inheri..

  Calculate how much these options are in or out of the money

Calculate how much these options are in or out of the money.

  What is the standard deviation of portfolio

John’s portfolio consists of $1000 in XYZ stock and $4000 in ABC. Historically XYZ has had an average return of 16% annually with a standard deviation of 30%. Historically ABC has an average return of 24% annually with a standard deviation of 40%. Wh..

  Based on quantitative evaluation methods

Should we base our decisions on which opportunities to pursue solely based on quantitative evaluation methods like NPV, IRR, MIRR, Payback, Real Options and others? Support your view.

  What will be the pure bond value of the company bonds

what will be the pure bond value of the Pittsburgh Steel Company bonds?

  The certainty equivalent method

The certainty equivalent method:

  Determine the significant factors that made strategy

Determine the significant factors that made the implementation of the company's strategy so effective. Provide support for your rationale.

  Cds contract and conventional insurance contract

What are the differences between a CDS contract and a conventional insurance contract?

  Calculate the arithmetic average returns of your stock

Calculate the arithmetic average returns of your stock, your competitor and the S&P500 index separately for the 2005-2006, 2007-2009 and 2010-2016 periods.

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