Answer:
Answer :The annual incentive fees according to Black Scholes Formular =2.5
Explanation:
a)Find the value of call option using below parameter
current price (st)=$71
Strike price(X)=$78
Rf=4%
std=42%
time=1
value of call option=15.555
Annual incentive=16% x 15.555=2.5
The annual incentive fees according to Black Scholes Formular =2.5
(b) The value of annual incentive fee if the fund had no high water mark and it earned its incentive fee on its return in excess of the risk-free rate? (Treat the risk-free rate as a continuously compounded value to maintain consistency with the Black-Scholes formula.)
current price (st)=71
Strike price(X)=78
Rf=(e^4%)-1 = 4.08%
std=42%
time=1
value of call option=17.319
Annual incentive=16% x 17.319=2.77
Answer:
lower
Explanation:
As people would make a smaller profit but more if it accumulating it to get bigger than expensive with less sales.
Answer:
The current share price is $37.49(appx)
Explanation:
Consider the following calculations
current share price
= 5/(1+0.14) +12/(1+0.14)^2 + 18/(1+0.14)^3+1.8/(1.0.14)^4+1.8/(0.14-0.04)*(1+0.14)^4
=4.386+9.233+12.15+1.065+10.657
=$37.49 (appx)
The correct answer was
D) producers would discover that the price should be lowered.
If consumers and firms become less optimistic about the future economy then (C) unemployment will rise.
<h3>
What is unemployment?</h3>
- Unemployment is the state of being capable of working, actively seeking work, but unable to find any.
- It should be noted that in order to be considered unemployed, a person must be an active member of the labor force and actively seeking remunerative work.
- Unemployment reduces demand, consumption, and purchasing power, resulting in lower profits for businesses and budget cuts, and workforce reductions.
- It starts a vicious cycle that is difficult to break without outside intervention.
- Unemployment will rise if consumers and businesses become less optimistic about the future economy.
Therefore, if consumers and firms become less optimistic about the future economy then (C) unemployment will rise.
Know more about unemployment here:
brainly.com/question/305041
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The complete question is shown below:
1. Consider an economy at full employment. If consumers and firms become less optimistic about the future economy then
a) price levels will rise.
b) output will rise.
c) unemployment will rise.
