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What is the value of the call-ervin corp

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Reference no: EM132645195

1.You are planning to save for retirement over the next 32 years. You will invest $859 per month in a stock account and $329 per month in a separate bond account. The return of the stock account is expected to be 12%, and the bond account will pay 6%. When you retire, you will combine your money into an account with an expected 9% return.

How much can you withdraw each month in retirement from your account assuming a 20-year withdrawal period? (Round answer to 2 decimal places. Do not round intermediate calculations).

2.Hughes Co. is growing quickly. Dividends are expected to grow at a 15.8 % rate for the next three years, with the growth rate falling off to a constant 3.1 % thereafter.

If the required return is 8.4 % and the company just paid a $1.69 dividend, what is the current share price? (Round answer to 2 decimal places. Do not round intermediate calculations).

3.The price of Ervin Corp. stock will either be $62 or $87 at the end of the year. Call options are available with one year until expiration. Continuously compounded T-bills currently yield 3.88 %. Suppose the current price of Ervin stock is $74.

What is the value of the call option if the strike price is $75 per share? (Round answer to 2 decimal places. Do not round intermediate calculations).

4.The price of Ervin Corp. stock will either be $69 or $85 at the end of the year. Call options are available with one year until expiration. Continuously compounded T-bills currently yield 2.87 %. Suppose the current price of Ervin stock is $73.

What is the value of the call if the strike price is $55 per share? (Round answer to 2 decimal places. Do not round intermediate calculations).

5.A stock is currently selling for $38 per share. A call option with an exercise price of $45 sells for $2.88 and expires in three months.

If the risk-free rate of interest is 3.89 % per year, compounded continuously, what is the price of a put option with the same exercise price? (Round answer to 2 decimal places. Do not round intermediate calculations).

Reference no: EM132645195

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