User Account

All Pages

What is the risk-neutral probability

Assignment Help Finance Basics
Reference no: EM13304338

Suppose the current stock price is $50. At the end of 6 months it will be either $56 or $45. The risk-free interest rate is 2% per annum. What is the risk-neutral probability that the stock price will increase in 6 months? Report in percentage such as 55.55%.

Reference no: EM13304338

Questions Cloud

Junk food will adapt to the tax : The issue I have with a proposed Junk food tax is that ultimately it would not be consistant. Producers of so called junk food will adapt to the tax. Junk food is some of the lowest average cost food options around by taxing this product manufacturer..
Greek mythology/literature emphasized the moira : Greek mythology/literature emphasized the moira, which is defined as:
Different cultures and diffrent work ethics : Diversity is important because, have different cultures, and diffrent work ethics can be fun and interesting in the workplace. If everybody would get to know each other, people would get along better. Communication among co-workers would build divers..
What strategy results in an arbitrage profit : A 1-month European call option on a non-dividend-paying stock is currently selling for $2.50. The stock price is $50, the strike price is $47, and the risk-free rate is 6%. What strategy results in an arbitrage profit?
What is the risk-neutral probability : Suppose the current stock price is $50. At the end of 6 months it will be either $56 or $45. The risk-free interest rate is 2% per annum. What is the risk-neutral probability that the stock price will increase in 6 months? Report in percentage ..
What is the value of a 1-year european : Currently, a stock price is $51. Over each of the next 2 6-month periods it is expected to go up by 12% or down by 10%. The risk-free rate is 6% per annum with continuous compounding. What is the value of a 1-year European put option with a str..
Use black-scholes formula : Calculate the price of a 4-month European call option on a dividend-paying stock with a strike price of $30 when the current stock price is $34, the risk-free rate is 6% per annum and the volatility is 40% per annum. A dividend of $1.00 is exp..
Use black-scholes formula. : Calculate the price of a 4-month European call option on a dividend-paying stock with a strike price of $30 when the current stock price is $34, the risk-free rate is 6% per annum and the volatility is 40% per annum. A dividend of $1.00 is exp..
A six-month american put option with a strike price of $73 : A stock price is currently $70. Over each of the next two three-month periods, it is expected to go up by 8% or down by 6%. The risk-free rate is 4% per annum with continuous compounding. What is the value of a six-month American put option wi..

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute the forward discount or premium

Evaluate the forward discount or premium for the Mexican peso whose 90-day forward rate is $.102 and spot rate is $.10. State whether your answer is a discount or premium.

  Multiple choice question on wacc

Brandon Corporation consists of two divisions of same size, and Brandon is 100% equity financed. Division A cost of equity capital is 9.8%, while Division B cost of equity capital is 14%.

  What should a share of charlie company sell for

Charlie Company is expected to grow at an annual rate of 6% indefinitely. The return on similar stocks is currently 11%. Charlie's board of directors declared a dividend of $1.85 yesterday. What should a share of Charlie Company sell for?

  Find the controls and weaknesses in the controls

Find the controls and weaknesses in the controls, Misappropriation of funds, Audit procedures and to test the control system.

  What will you owe the bank

If the home appreciates at 1%, how old will you be before your loan balance exceeds the value of the home?

  Determine the value of one share

Suppose you are planning a project which has been assigned a discount rate of 8 percent. If you start the project today, you will incur an initial cost of $480 and will receiv cash inflows of $350 a year for three years.

  What is the standard deviation of the returns

A security has the following expected returns and probabilities of occurrence.

  Calculation of level of activity for a given target profit

Calculation of level of activity for a given target profit and selling price and The costs below are for one of many identical firms in a competitive market

  What is the yield to maturity

A $1000 face value bond with six years to maturity and a twelve percent semiannual coupon currently sells for $950. What is the yield to maturity?

  Calculation of adjusted net income

Calculation of adjusted net income using ratio analysis and evaluate the amount of 2007 income taxes the Company saved (or paid) as a result of using the LIFO inventory valuation method

  Eexercised the option and the immediately sold the stock

Suppose you own a call options that permits you to purchase 100 shares of the stock of Silicon Graphics for $15 per share any time in the next three months. Silicon Graphics has a current market price of $12 per share. Should you excise the op..

  Common share capital account and retained earnings account

Matrix Enterprises is planning offering both a stock dividend and a cash dividend in the upcoming year. The most recent balance sheet for Matrix is given below.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd