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The price of a European put that expires in six months and has a strike price of $100 is $3.59. The underlying stock price is $102, and a dividend of $1.50 is expected in four months. The term structure is flat, with all risk-free interest rates being 8% (cont. comp.).
a. What is the price of a European call option on the same stock that expires in six months and has a strike price of $100?
b. Explain in detail the arbitrage opportunities if the European call price is $6.1. How much will be the arbitrage profit?
c. Explain in detail the arbitrage opportunities if the European call price is $8.8. How much will be the arbitrage profit?
Mega stock is expected to grow at 11% in year 1 and year 2, 10% in year 3, 8 % in year 4 and then grow at a constant rate of 4% in the years that follow.
Vibrant Company had $940,000 of sales in each of three consecutive years 2016-2018, and it purchased merchandise costing $520,000 in each of those years.
What type of industries would make the most use of short-range, medium-range, and long-range forecasts?
The Flying Toaster Appliance Company is considering a new project. The equipment will cost $30,000, have a six-year life, and be depreciated to a zero salvage value. The tax rate is 40% and the appropriate discount rate is 12%. Fixed costs for additi..
a manager buys three shares of stock today and then sells one of those shares each year for the next 3 years. his
MC Enterprises estimates that it takes, on average, 9 days for their customers' payments to reach them, 2 day for the payments to be processed
Dorman Industries has a new project available that requires an initial investment of $5.7 million. The project will provide unlevered cash flows of $795,000.
Please explain what the discount model is, what is used for, and the benefits of using it.
Prepare a statement showing the incremental cash flows for this project over an 8-year period. Calculate the Payback Period (P/B) and the NPV for the project.
what minimum yearly cash inflow will be necessary for the company to go forward with this project? b. How would the minimum yearly cash inflow change if the company required a 10% return on its investment?
Suppose Microsoft, Inc., is trading at $27.29 per share. It pays an annual dividend of $0.32 per share, and analysts have set a one-year target price around $33.30 per share. What is the expected return of this stock?
Project SoftTec's income statement for 2015. Determine the annual increases in required net working capital and capital expenditures .
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