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Assume that you instead have shorted a call on the Intuit stock at a strike price of 36. The option will expire in exactly three months’ time.
Problem 1
If the stock is trading at 46 in three months, how much will you owe? State you answer rounded off to two decimal points.
Problem 2
If the stock is trading at 32 in three months, how much will you owe? State you answer rounded off to two decimal points.
Problem 3
Dynamic Energy Systems stock is currently trading for 32 per share. The stock pays no dividends. A one-year European put option on Dynamic with a strike price of 41 is currently trading for 9.18. If the risk-free rate of interest is 10% per year, what is the price of a one-year European call option on Dynamic with a strike price of 41? State you answer rounded to two decimal points.
A company has determined that its optimal capital structure consists of 45 percent debt and the rest is equity. Given the following information, calculate the firm's weighted average cost of capital. kd = 7.0% Tax rate = 37% P0 = $36.27 Growth = 3.2%..
How much are Darla's trust payments worth today?
Phosfranc Inc., is expecting the following cash flows starting at the end of the year—$133,245, $152,709, $161,554, and $200,760. If their opportunity cost is 9.4 percent, find the future value of these cash flows.
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.4 million.
Johnson Jets is considering two mutually exclusive projects. Project A has an up-front cost of $122,000 (CF0 = -122,000), and produces positive after-tax cash inflows of $30,000 a year at the end of each of the next six years. Compute the equivalent ..
Liquidity and Asset Management Ratios Oasis Products, Inc. has current liabilities = $11.3 million, current ratio = 1.80 times, inventory turnover ratio = 12.3 times, average collection period = 23 days, and sales = $115 million. What is the value of..
Suppose that you estimate the following regression describing the evolution of beta over time:
Joe Merchant is evaluating his hedges. How much is the current carry between CZ17 and CN18?
Tim expects to make a special savings contribution of 15, 900 dollars In 5 years from today. What is X, the amount of Tim's regular savings contribution?
You drink 5 beers to celebrate the end of your risk management and insurance class, then have an accident while driving home from the bar. The police charge you with drunk driving, and with hitting another automobile from behind. The exclusion of flo..
What is the percentage change in price for a zero coupon bond if the yield changes from 6.5?% to 8?%? The bond has a face value of ?$1,000 and it matures in 19 years. Use the price determined from the first? yield, 6.5?%, as the base in the percentag..
A portfolio is invested 40 percent in Stock G and 60 percent in Stock J. The expected returns on these stocks are 10 percent and 15 percent respectively. What is the portfolio’s expected risk? Is there any benefit of combining the two stocks? Or will..
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