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Current share price is $30. The volatility of this stock is 0.80 per annum. A call option written on this stock has 16 months before expiry and a strike price of $28. The riskless rate of interest is 4% per annum continuously compounded.
We want to value a derivative based on this stock.
If we use a 4-step Binomial tree to model share-price movements over the next 16 months, the risk-neutral probability p* of an up movement in share price on any given branch is _______?
If we use a 8-step Binomial tree to model share-price movements over the next 16 months, the risk-neutral probability p* of an up movement in share price on any given branch is ________ ?
Enter your answer to 4 decimal places. If your answer is 12.34%, enter 0.1234
The figure below ?, shows the? one-year return distribution for RCS stock.? Calculate:
Compounded annually
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The company has no nonoperating assets (NOA). If the appropriate WACC is 10 percent, what is the enterprise value of this business?
If after one year the market value of the loan has increased by 1.8% and LIBOR is 5%, what will be the net obligation of Interloan?
Suppose a? five-year, $ 1 000 bond with annual coupons has a price of $ 903.57 and a yield to maturity of 6.1 %. What is the? bond's coupon? rate?
We are discussing the use of derivatives to reduce the exposure risk of business ventures.
The beta of JK stock is 1.4. What is the risk-free rate of return?
Go Corp. expects free cash flows of $1,000,000, $1,100,000, $1,200,000, $1,300,000, $1,400,000, in years 1,2 3,4, 5 respectively.
Explain why the NPV of a relatively short-term project, with a high percentage of its cash flows expected in the near future, is less sensitive
With the advent of the Internet, business intelligence, data warehouses, and other technologies, the strategic planner has access to far more data than any one person can effectively analyze. What are the costs and benefits of all this access?
In each of the following situations, what risk do you face from price fluctuations? What would have to be true of a derivatives security if the security were to help you to hedge this risk?
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