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Bond [772]
3 years ago
10

Jafee Corp. common stock is priced at $36.50 per share. The company just paid its $0.50 quarterly dividend. The continuously com

pounded risk free annual interest rate is 6.0%. A $35.00 strike European call, maturing in 6 months, sells for $3.20. What is the price of a 6-month, $35.00 strike put option?
Business
1 answer:
seraphim [82]3 years ago
3 0

Answer:

(d) $1.55≤VP(0)<$1.76

Explanation:

VP(0) =VC(0) +Ke-rT-FP0

T(S) =VC(0) +Ke-rT-S(0) +De-rt1+De-rt2

Using the formulae

= 3.20 + 35e-0.06/2-36.50 + 0.50e-0.06/4+ 0.50e-0.06/2

=1.64.

The priceVP(0) of a 6-month, $35.00 strike put option is 1.64

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You own one call option with an exercise price of $30 on Nadia stock. This stock is currently selling for $27.80 a share but is
Shalnov [3]

Answer: 0.755

Explanation:

From the information given, the current per share value of the option if it expires in one year will be calculated as follows:

Firstly, we calculate the present value which will be:

= $28 / ( 1 + 0.05 )

= $28/1.05

= $26.667

The number of options needed will be:

= ( 34 - 28 )/ ( 4-0)

= 6/4

= 1.5

Therefore,

27.80 = (1.5 x Co) + [28 / (1+0.05)]

27.80 = 1.5Co + (28/1.05)

27.80 = 1.5Co + 26.667

1.5Co = 28.0 - 26.667

1.5Co = 1.1333

Co = 0.755

Therefore, the answer is 0.755

5 0
3 years ago
Final customers or users are normally asked to pay ______________ prices for products they buy. 1. basic list 2. unchanging list
bulgar [2K]
<span>Usually final customers pay basic list prices. A list price is what the manufacturer suggests the retail price is. This type of price is determined by supply and demand. It is usually the initial asking price. The basic price is the amount receivable by the producer from the purchaser for a good or service that is produced minus the taxes.</span>
5 0
3 years ago
if abc company receives $100,000 cash in exchange for issuing 100 bonds at their $1,000 face value, the transaction will be reco
m_a_m_a [10]

Based on the information the appropriate journal entry to record the transaction is : Debit to cash of $100,000; Credit to bonds payable of $100,000.

Based on the information given we were told that the cash  amount of $100,000 cash was received my the company in exchange for issuing 100 bonds at their $1,000 face value.

Therefore the correct journal entry to record the transaction is:

Debit  Cash  $100,000

Credit Bonds payable  $100,000

(To record bonds payable)

Learn more here:<em> brainly.com/question/19091678</em>

8 0
3 years ago
Empire Industries is considering adding a new product to its lineup. This product is expected to generate sales for four years a
Fudgin [204]

Answer:

$1,758.71

Explanation:

NPV = -$62,000 + $16,500 / 1.148 + $23,800 / 1.1482 + $27,100 / 1.1483 + $23,300 / 1.1484

NPV = $1,758.71

7 0
3 years ago
Babak owns a sports practice facility called Boston Batting Cages in Boston, Massachusetts. During the first year of operation,
lions [1.4K]

Answer:

$8000

Explanation:

They have to pay $8,000 as an implicit costs.

The implicit expenditure is the advantage of the right to use the personal resources of a company that is not listed as actual, distinct expenditures.

 Computation of Implicit cost for the Boston Batting Cage :

Implicit cost = Labor + maintenance + electricity

= $5,000 + $2,000 + $1,000

= $,8000

7 0
3 years ago
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