What is risk-free interest rate

Assignment Help Financial Management
Reference no: EM131552303

Your buy a share of stock, write a 1-year call option with X = $15, and buy a 1 - year put option with X = $15. Your net outlay to establish the entire portfolio is $13.9. The stock pays no dividends.

What is the risk-free interest rate? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$"sign in your response.)

Reference no: EM131552303

Questions Cloud

The importance of financial planning in our daily real life : What is arbitrage? Why do arbitrage opportunities vanish quickly? Explain the importance of financial planning in our daily real life.( in essay format)
Expect the company market value to increase : In which occasion, can you expect the company’s market value to increase?
What are your disbursement-collection and net floats : You have $26, 500 on deposit with no outstanding checks or uncleared deposits. What are your disbursement, collection, and net floats?
Growth rate-maintain to satisfy the entire investors : What is the overall growth rate this company has to maintain to satisfy the entire investors (creditors & shareholders)?
What is risk-free interest rate : What is the risk-free interest rate?
It is likely to be viewed negatively by investors : If a xyz company increases their dividend rate, it’s likely to be viewed negatively by investors.
The term ex-dividend means : The term ex-dividend means. The book value of equity is the value of the company as perceived by investors.
Describe role of corporate raider in the fourth merger wave : Describe the role of the Corporate Raider in the Fourth Merger Wave.
What is xyz return on assets : XYZ SA has been a return on equity of 20%. A net profit margin of 6% and debt to equity ratio of 1. What is XYZ return on assets?

Reviews

Write a Review

Financial Management Questions & Answers

  Based on economists forecasts and analysis

Based on economists’ forecasts and analysis, one-year T-bill rates and liquidity premiums for the next four years are expected to be as follows: Identify the four annual rates.

  What is adjusted tax basis in his new property

A fire destroyed a machine that Newman owned and used in his small business. What is Newman’s adjusted tax basis in his new property?

  Compute the real interest rate

Suppose that the following conditions all hold: uncovered and covered interest rate parity, real interest rate parity, relative and absolute purchasing power parity. Compute the real interest rate in Brazil using the information above, or state if th..

  What is the present value of the savings

Your company will generate $74,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 7.25 percent, what is the present value of the savings?

  What was the restructuring accrual associated

Cranberry Chemical recorded pre tax restructuring charges of $1378 million in 2014. The charges consisted of asset write-downs of $908 million, costs associated with exit or disposal activities of $132 million, and employee severance costs of $338 mi..

  Define open architecture

Define open architecture. Do you think it will increase or decrease in importance to the intermediary and direct distribution channels?

  What is the project sales for next year

Gary’s Pipe and Steel company expects sales next year to be $700,000 if the economy is strong, $400,000 if the economy is steady, and $250,000 if the economy is weak. Gary believes there is a 20 percent probability the economy will be strong, a 50 pe..

  Appeared in a column in the wall street journal

In late April 2010, Apple’s stock was selling for more than $260 per share. The following appeared in a column in the Wall Street Journal, listing potential problems facing Apple that might cause the price of the firm’s stock to decline: Some of thes..

  Storage and insurance costs are zero

If the spot price of gold is $983 per troy ounce, the risk-free interest rate is 7%, and storage and insurance costs are zero. what should be the forward price

  About the lease versus buy

Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. The loan would have an interest rate of 16%. What is the NAL of the lease?

  What is the pre-tax cost of debt for the newly-issued bonds

What is the internal rate of return's assumption about how cash flows are reinvested? Crandal's flotation expense on the new bonds will be $50 per bond. Crandal's marginal tax rate is 35%. What is the pre-tax cost of debt for the newly-issued bonds?

  Calculate the EAR for each bank

First National Bank charges 10.4 percent compounded monthly on its business loans. First United Bank charges 10.6 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan? Calculate the EAR for each bank.

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