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You are going to celebrate your 21st birthday six months from now. Your strict, yet kind, FIN 3000 professor informs you that he will be gifting you $50 on your birthday. You plan to use this gift to gain some experience in trading stocks. You are really interested in the steel company Nucor. The current market price for Nucor's stock is $40. You decide that six months from now, you will buy this stock. However, you realize that six months from now, if the price of the stock is more than 50$, you won't be able to afford the stock. After studying Options, you decide to buy a call option today for Nucor Steel's stock at a strike price of $50. The riskiness of the stock (as measured using standard deviation 'sigma') is 25% and the risk free rate is 5%. What is the fair price for the call option, according to Messrs Black and Scholes? You are given the following information: N(-1.0325)= 0.1509, N(1.4921)= 0.9322, N(-1.2093)= 0.1133, N(1.3153)=0.9058, N(-0.5676)=0.2852 and N(-0.8176)=0.2068. Pick the ones you need to solve this.
A) ?$0.51 ?B) ?$0.43 ?C) ?$0.47 ?D) ?$0.36
bank has used its internal models to estimate the regular and stressed value-at-risk for its trading book as $250,000 and $500,000
You are planning to buy a house. Assume that you have the cash to pay 10% down payment on any home that you $2, 200/month maximum payment can afford including taxes and insurance (no PMI required). A lender offers you a 20-year fixed mortgage for the..
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One example of financial intermediation is selling of mortgages by banks to third party. What is impact of all this activity on cost-availability of mortgages?
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Explain how accounts are listed in the trial balance and the importance of the trial balance in preparing financial statements
XY Windows has a projected sales volume of $2864 for the second year of a proposed expansion project. Costs normally run 60% of sales, (or about $1718.40 in this case) the depreciation expense will be $90 and tax rate is 34%. What is operating cash f..
In a slow year, Deutsche Burgers will produce 2.9 million hamburgers at a total cost of $4.3 million. In a good year, it can produce 4.9 million hamburgers at a total cost of $5.5 million. What are the fixed costs of hamburger production? What is the..
Identifying an externality can never lead to an increase in the calculated NPV.
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