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1.Which of the following statements about the volatility is not true? a. the implied volatility often differs across options with different exercise prices b. the implied volatility equals the historical volatility if the option is correctly priced c. the implied volatility is determined by trial and error d. the implied volatility is nearly linearly related to the option price e. none of the above
2.Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European. Assume that all transactions consist of 100 shares or one contract (100 options). Use this information to answer questions 7 and
3. What is your profit if you buy a call, hold it to expiration and the stock price at expiration is $37? a. $32.89 b. $30.00 c. $27.11 d. $32.15 e. there is no breakeven The profit = $411 I believe the choices provided are incorrect 4. Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European.
Assume the discount rate is equal to theaftertax cost of new debt rounded up to the nearest wholenumber. Should Sunbelt Corp. refund the old issue?
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1. Do you agree with the Bonneau's decision to sell? Why or why not? 2. Why did the buyer's retain Ed as a consultant? 3. Do you see any problem with having the Bonneau's son-in-law become the new chief operating officer?
P6-5 Nominal interest rates and yield curves A recent study of inflationary expectations has revealed that the consensus among economic forecasters yields the following average annual rates of inflation expected over the periods noted. (Note: Assume ..
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Define every part of a financial plan and discuss the importance of these components.
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discuss the dividend policy disney world answer the following questions as part of your responsehow would you describe
Now assume that Bank Z makes a loan in the amount that can be safely lent against the funds deposited in its bank from the transaction described in (b). Show what Bank Z's balance sheet of assets and liabilities would look like after the loan.
If average daily remittances are $2 million, and "extended disbursement float" adds 2 days to the disbursement schedule, how much should the firm be willing to pay for a cash management system if the firm earns 11% on excess funds.
you purchase a stock for 100 that pays an annual dividend of 5.50. at the beginning of the second year you purchase an
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