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Darya [45]
3 years ago
5

You have entered into a long forward contract on a dividend-paying stock some time ago, and this will expire in six months. It h

as a delivery price of $40 and the current stock price is $35. The stock provides a fixed dividend yield of 8% with semi-annual compounding. If the risk-free rate is 12% per annum with continuous compounding, what is the value of this long forward contract?
A. $6.72

B. -$4.02

C. $4.02

D. -$6.72
Business
1 answer:
Vlad1618 [11]3 years ago
5 0

Answer:

correct option is B. -$4.02

Explanation:

given data

delivery price = $40

current stock price = $35

fixed dividend yield = 8% = 0.08

risk free rate = 12% = 0.12

solution

as we know that forward contract is a agreement that is made between 2 parties ( seller or buyer ) asset in future at today fix price in specified time,

we get here long forward contract value that is express as

long forward contract = \frac{stock\ price}{(1+dividend\ rate)^t} -\frac{forward\ rate}{e^{r*t}}    ...................1

put here value we get

long forward contract = \frac{35}{(1+0.08)^{6/12}} -\frac{40}{e^{0.12*6/12}}  

solve it we get

long forward contract = -$4.02

so correct option is B. -$4.02

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motikmotik

If a policy change causes a Pareto improvement, is the outcome necessarily Pareto efficient if a policy change causes a Pareto improvement, then the outcome is not necessarily Pareto efficient this is because another change in the policy could cause another Pareto improvement.

A Pareto development is a development of a device whilst an alternative in the allocation of goods harms no person and advantages as a minimum one character. Pareto enhancements also are called "no-brainers" and are generally predicted to be rare, due to the plain and effective incentive to make any available Pareto development.

Factors that lie within the PPF display an inefficient or below-usage of resources – this is Pareto inefficient. A Pareto development way that output of both products can increase as we move from inside the PPF to factors at the PPF boundary.

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4 0
1 year ago
What are the underlying reasons for the law to continue to make distinctions between real and personal property, intangible and
kap26 [50]

Answer:

In trying to made distinction between the real and personal property as the law provided, there is need to define both terms.

Real properties are those properties that can not be move from one place to another, I.e, they are immovable. Example of such property is land and the building constructed on it or agricultural practices on a particular land. In some textbooks, they are regarded as fixed asset such as a manufacturing plants which are in most cases not likely to be removable after the foundation as been laid due to the heaviness of the machines.

While

Personal property are those properties that are movable and example of such is money.

So, in both properties, the nature of use and level of controls the owner have over them differs and that is why the law provided specific rules and regulations over their ownership, possession and or transferrability. As for Real Properties, the law is very strict about it since it is a rigid property and its transferrability requires deed of agreement which much must be signed by witnesses from all parties involves and registered at the deed registry. The law also provides very strict tax regulations on landed property. As for the personal property, the regulation on it is less compare to that of real since it's movable and can be asset by the owner at any time and transfer of ownership is flexible. So, the law will continue to make distinction between these two types of property as they requires different regulations and their level of control differs.

Also for the tangible and intangible property, the law will continue to make distinction between them since one can be seen and the other can't.

Tangible properties are those properties that can be seen, touch, and physically acquired or taken into possession. Example is land, Building or workshop, Automobile. e.t.c

While,

Intangible properties are those properties that can not seen physically but exist on papers. Their impact can only be felt. Example of such properties are intellectual properties that are backed by copyrights, Academic presentations protected from plagiarism, checks and certificates of deposits.

From their definition, it is important to state that law will continue to make distinction between them since the control of ownership differs.

4 0
3 years ago
Keithomp, a company that manufactures and exports candies, sells different flavors of candy depending on the taste preferences o
qwelly [4]

Answer: Option B  

                                                                         

Explanation:  In simple words, geographic departmentalization refers to the  process under which an organisation separates its market operations on the basis of the geography such as country, state or district etc.

In the given case, company has separated its operations on the basis of different preferences of different countries.

Hence from the above we can conclude that the correct option is B .

8 0
3 years ago
JG Asset Services is recommending that you invest $1,500 in a 5-year certificate of deposit (CD) that pays 3.5% interest, compou
skelet666 [1.2K]

Answer:

So after 5 year total amount will be $1781.529

So option (a) is correct option

Explanation:

We have given that JG Asset is recommending that you invest $1500 for 5 years at rate of 3.5%

So principle amount P = $1500

Rate of interest r = 3.5 %

Time n = 5 years

We know that when total amount is given by

A=P(1+\frac{5.5}{100})^n, here r is rate of interest and n is time period

So amount after 5 years will be

A=1500(1+\frac{3.5}{100})^5=$1781.52

So after 5 year total amount will be $1781.529

So option (a) is correct option

5 0
3 years ago
The following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2020:
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Answer:

Explanation:

Please see attached file .

Download docx
5 0
3 years ago
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