Answer:
The price of 3 months call option on stock is 8.03.
Explanation:
Acording to the details we have the following:
P = Price of 3-months put option is $6
So = Current price is $95
X = Exrecise price is $95
r = Risk free interest rate is 9%
T = Time is 3 months=1/4
C=Price of call option?
Hence, to calculate what must be the price of a 3-month call option on C.A.L.L. stock at an exercise price of $95 if it is at the money, we have to use the formula from put-call parity.
C=P+So-<u> X </u>
(1+r)∧T
C=$6+$95- ( <u>$95 )</u>
(1+0.09)∧1/4
C=$6+$95-$92.97
C=8.03
The price of 3 months call option on stock is 8.03
$480 would be your answer because the fair value per share $8 x 60 mil = $480 the $480 mil total compensation is expensed equally over the three-year vesting period reducing earnings by $160 million each year :D
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
Answer: 97.99
Explanation:
The one-year forward rate that an investor would be indifferent between the U.S. and Japanese investments will be:
= Spot rate × (1 + Japanese rate / 1 + U.S rate)
= 101 × (1 + 1% / 1 + 4.1%)
= 101 × [(1 + 0.01) / (1 + 0.041)]
= 101 × (1.01/1.041)
= 101 × 0.9702209
= 97.99
Answer:
Option (B) is correct.
Explanation:
Dividend per share:
= (65% of Par value of the stock)
= (65% × 0.01)
= $0.0065
Hence, the total dividend:
= (Dividend per share × outstanding shares of common stock)
= (0.0065 × 4.96 million)
= $32,240
Hence, the dividend would cause a decrease in retained earnings.
Therefore, the correct option is B.
