Shares of opto-binocular company

Assignment Help Finance Basics
Reference no: EM133058539

Shares of Opto-Binocular Company stock currently trade at $66. The annual standard deviation of the underlying stock returns is 20% per year, and the risk-free interest rate is 9%, annual rate, compounded quarterly. The stock will pay no dividends or undertake any other capital distributions. Consider a put option on a share of Opto-Binocular with an exercise price of $64. This option can only be exercised at expiration, in 90 days. Use the binomial option pricing model with 2 sub-periods to value this option.

Reference no: EM133058539

Questions Cloud

What is project npv : Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.7 million. The equipment will be depreciated
Aggregate dollar cash flows : Would the aggregate dollar cash flows to be received by a company in the US be riskier than if the exchange rate movements were completely independent vs having
Find the value of the stock : The firm has 5 million shares outstanding and the value of debt is $250 million. If the WACC is 12 percent, find the value of the stock.
Interpret the expected impact on the value : You work for ABC Berhad in the finance department. You own 300 shares in ABC Berhad, that are selling at RM20 per share on Bursa Malaysia. There are currently 2
Shares of opto-binocular company : Shares of Opto-Binocular Company stock currently trade at $66. The annual standard deviation of the underlying stock returns is 20% per year, and the risk-free
What is the arbitrage strategy : If the option price is out of its boundary, what is the arbitrage strategy you would use?
What is the forward price and initial value : a. What is the forward price and initial value of the forward contract?
Set up an arbitrage strategy : a. A four-month European call option on a dividend-paying stock is currently selling for $4. The stock price is $64, the strike price is $60, and a dividend of
What is the real-world probability : a. A stock price follows a geometric Brownian motion with an expected return of 16% and a volatility of 34%. The current price is $38.

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculations of loan fees income

An FI makes a loan commitment of $2,500,000 with an up-front fee of fifty basis points and a back-end fees of 25 basis points on the unused portion of loan. The takedown on the loan is 50 percent.

  Should the finance manager proposal be accepted

Home Depot expects sales of $20 million this year under the current credit policy. The present credit terms is net 30 but the DSO is actually 45 days, and the b

  Prepare an unadjusted trial balance from the spreadsheet

The company purchased $7,500,000 of raw material inventory on account. "On account" means that their suppliers have not yet been paid. Prepare an unadjusted trial balance from the spreadsheet

  What is monthly payment

Suppose you need to borrow $400,000 to buy a house. The bank of Montreal offers you a 5 year term mortgage with a rate of 7.252% to be amortized over

  What is the expected return of yerba stock after this

Suppose that prior to this transaction, Yerba expected earnings per share this coming year of $1.50, with a forward P/E ratio (that is, the share price divided by the expected earnings for the coming year) of 14.

  Find the magnitude and velocity of the water jet

Determine the magnitude of the x and y components of the force exerted on the fixed blade shown by a 3-ft3 /s jet of water flowing at 25 fps.

  Underwriter spread per share on the stock issue

Suppose that a company's equity is currently selling for $25.75 per share and that there are 3.7 million shares outstanding and 17 thousand bonds outstanding

  Determine what training an expatriate would need

determine what training an expatriate would need in terms of culture, religion and history to be successful. Provide specific examples to support your response.

  Value of the option to expand

What is the value of the option to expand? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

  Conflicts between some groups of stakeholders

At the beginning of a project, if you anticipate conflicts between some groups of stakeholders, how can you plan to handle those conflicts?

  What will its cost of equity be

Triangle Enterprises has no debt but can borrow at 9 percent. The firm's WACC is currently 14.7 percent, and there is no corporate tax. If the firm converts to 70 percent debt, what will its cost of equity be?

  What is the amount of the dividend per share

Marie owns shares of Deltona Productions preferred stock which she says provides her with a constant 14.3 percent rate of return. The stock is currently priced at $45.45 a share. What is the amount of the dividend per share?

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