What should be the value of put

Assignment Help Financial Management
Reference no: EM131905546

A put option on a stock with a current price of $48 has an exercise price of $50. The price of the corresponding call option is $4.50. According to put-call parity, if the effective annual risk-free rate of interest is 6% and there are four months until expiration, what should be the value of the put? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131905546

Questions Cloud

Calculate the variance of portfolio consisting : Calculate the variance of a portfolio consisting of 50% Toyota and 50% Honda.
What is the variance of the stock : If each economy state has the same probability of occurring, what is the variance of the stock?
What is the standard deviation of orange : The return on shares of the Orange Company are predicted under the following states of nature. What is the standard deviation of Orange?
How many pounds of coffee beans using supply contracts : To hedge its profits from fluctuations in coffee prices, Carlos G.M. should lock in the price of how many pounds of coffee beans using supply contracts?
What should be the value of put : If the effective annual risk-free rate of interest is 6% and there are four months until expiration, what should be the value of the put?
What is effective annual rate of warehousing arrangement : The Abhee H. Reatail is considering using a public warehouse loan as part of its short-term financing. What is effective annual rate of warehousing arrangement?
What are the best-case and worst-case NPVs : McGilla Golf has decided to sell a new line of golf clubs. What are the best-case and worst-case NPVs?
Are their opportunities to pursue in order to grow company : Are their opportunities to pursue in order to grow the company? Can the company grow organically?
What should the bond be selling for two years : what should the bond be selling for two years from now? The bond pays interest semiannually.

Reviews

Write a Review

Financial Management Questions & Answers

  The bonds make semiannual payments-yield to maturity

Stein Co. issued 16-year bonds two years ago at a coupon rate of 9 percent. The bonds make semiannual payments.

  What is the annual worth of the machine

what is the Annual Worth of the machine that corresponds to its Economic Service Life?

  The repurchase for both normal and boom economy

The Grist Mill has no debt. The firm has a total market value of $245,000 with 10,000 shares of stock outstanding. The firm has expected EBIT of $14,000 if the economy is normal and $17,000 if the economy booms. Compute the EPS after the repurchase f..

  Processing tanks for your confectionary business

You are evaluating two processing tanks for your confectionary business.

  Marketing dimension of channels of distribution

Which of the following shows how a product was improved by modifying the marketing dimension of channels of distribution? A. The Caribbean cruise was improved by the addition of two more stops in Mexico. B. The 800-page history of chiropody was impro..

  Market is in equilibrium-market believe will be stock price

Assuming the market is in equilibrium, what does the market believe will be the stock's price at the end of 3 years (i.e., what is )?

  What is the weighted average cost of capital assuming

A firm has an asset base with a market value of $5.6 million. what is the weighted average cost of capital assuming no corporate taxes?

  Call option-what should the stock price be

A call option on Jupiter Motors stock with an exercise price of $80 and one-year expiration is selling at $2. what should the stock price be?

  What is the present-worth cost of the machine

A used machine costs $20,000 to purchase. It has an annual maintenance cost of $20,000, a salvage value of $5,000, and a 10-year life. If the interest rate is 10% per year, compounded annually, what is the present-worth cost of the machine? Please sh..

  How many houses of each type should domar build

Domar properties plc have a site covering 20,000m2 on which they wanted to build a mixed estate of 2- & 4-bedroom houses. The 2-bedroom houses will each occupy a plot of 60m2 and will be sold at a profit of $15,000. How many houses of each type shoul..

  What is the required return by bond holders

A-Z Inc. is planning to issue a $1000 face-value bond that matures in 10 years. What is the required return by bond holders?

  Principles of risk management and insurance

Sam, age 35, and Kathy, age 33, are married and have a son, age 1. Sam is employed as an accountant and earns $75,000 annually. Kathy is a professor of finance at a large state university and earns $150,000 annually. Sam is killed instantly in an aut..

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