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Consider the following portfolio:
Long (i.e. buy) 1 share, write a call option on the stock with a strike price of $50, write a call option on the stock with a strike price of $60, and long (i.e. buy) a call option on the stock with a strike price of $110. All options have the same expiration date.
1. Construct a table showing the payoffs from the trading strategy. You can ignore the price of the options when constructing this table.
2. Draw a picture that shows the payoff from the portfolio on the vertical axis, and stock price on the horizontal axis.
3. For what range of stock prices would the payoff be at its maximum? What will be the maximum payoff?
Ned currently pays a dividend of $1 per share. What is the value of Ned stock to an investor who requires a 12 percent rate of return?
What is the duration of this portfolio given the duration answers you got in the previous problems:
Consider two Portfolios, A and B. A is equally-weighted portfolio comprised of OIP and Riskfree.
Until the company has been incorporated it cannot contract or do any other act. Make appropriate use of case law and academic journal articles.
You will be paying $5,000 a year in tuition expenses at the end of the next 3 years. Bonds currently yield 30%. and if you plant to fund your obligation using a one-year zero-coupon bond and a perpetuity, how much of each of these bonds (in market va..
You own a $46,000 portfolio comprised of four stocks. What is the portfolio weight of stock D?
What is the probability that this particular bid will be successful, given that the request for additional information happened?
A Treasury bond that matures in 10 years has a yield of 4.25%. What is the default risk premium on the corporate bond?
What is the cost percentage of a new common stock issue?
The Wall Street Journal reports that the current rate on 5-year Treasury bonds is 2.85 percent and on 10-year Treasury bonds is 5.35 percent. Assume that the maturity risk premium is zero. Calculate the expected rate on a 5-year Treasury bond purchas..
Calculate the company's (a) inventory turnover and (b) days' sales in inventory for 2015 and 2016.
A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. Use the opportunity cost approach (outsider’s viewpoint approach).
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