Answer:
Explanation:
The Risk neutral probability is given by
e
rt
−
D / U-D
U=1.1
D=0.9
R=0.12
T=3/12
π
u
=
e∧
0.12
∗
3
/
12
−
0.9
/1.1
−
0.9
=0.652
π
d
=
1−
0.652
=
0.348
The values of american and european options at each node is given in the following table.
0.652
0
0.81 48.4
0.652
0.81
American option value 2.54 44
probability 0.652/0.3478'
Option value 2.12 2.4
Futures price 40 6 39.6
0.3478
4.76
36
0.3478
9.6
32.4
Time period 0 3 6
the value at up node at 3 months is given by = (
0.652∗
0
)
+
(
0.3478
∗
2.4
)/e
∧0.12
∗
3
/
12 = 0.81
Hence, value of european put option =$2.12
Value of American put option = 2.54
Answer:
Break-even point (dollars)= $3,087,500
Explanation:
Giving the following information:
Fixed Cost per Unit $50 Selling Price per Unit $325 Variable Costs per Unit $175 Target Operating Income $200,000.
Break-even point (dollars)= (fixed costs + profit) / contribution margin ratio
Break-even point (dollars)= (175*7000 + 200,000)/[(325 - 175)/325]= $3,087,500
Answer:
Option A, 20% more, is the right answer.
Explanation:
Given the beta value of stock A = 1.2
The beta value of stock B = 1
The beta value of stock A is greater than the stock B. Here, we can see that the beta of stock A is large by 20% as compared to the beta of stock B.
It can be calculated as = (Beta of stock A – Beta of stock B) / Beta of stock B
= (1.2 – 1) / 1
= 0.2 or 20%
Therefore, the return will also be more than 20%.
Thus, option A. 20% more is correct.
Answer:
Unfreezing
Explanation:
There are three phases of organizational change. Sun Technologies can be said to be at its unfreezing stage.
The organization must properly communicate with its employees and consumers at each level of changes they are.
- At the unfreezing stage, the goal is to change the mindset and belief of the consumers about a particular process being deployed.
- Since the adoption of the new technology is being advertised as one that will make things better, we can see elements of unfreezing here.
- Other stages are the actual change phase and freezing stage