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blondinia [14]
3 years ago
13

The price of a stock today is $100. next year, the stock price will be either $120 or $90. the risk-free rate is 3% per year. wh

at the the price of a put option with strike price $98
a. the put option price is $4.00
b. the put option price is $4.23
c. the put option price is $4.40
d. not enough information to tell
Business
1 answer:
fredd [130]3 years ago
5 0
A. The put option price is $4.00
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If a firm's projects differ in risk, then one way of handling this problem is to evaluate each project with the appropriate risk
zhuklara [117]

Answer:

True

Explanation:

the discount rate used for a project should reflect the risk of the project so as to make accurate predictions. if the discount rate used for a project is the same as that of the firm and the risks of the project differs, the predictions made with this project would be inaccurate. the risk adjusted discount rate has to be calculated.

7 0
3 years ago
Seth, Janice, and Lori each borrow 5,000 for five years at an annual nominal interest rate of 12%, compounded semi-annually. Set
Margaret [11]

Answer:

The total amount of interest paid on all three loans is 8,748.

Explanation:

Each person has borrowed 5,000 for the same period and with the same interest rate. However, the repayment is made differently by each person.

We calculate the interest paid by each person, and then sum up the three interest payments.

Seth pays = [5000 x (1 + 0.12/2)^10] - 5000 = 3,954

Janice pays = 5,000 X 0.06 x 10 = 3,000

Lori pays = [(5,000 x 10) / 7.36] - 5,000 = 1,794

Total interest payment = 3,954 + 3,000 + 1,794 = 8,748  

3 0
3 years ago
Read 2 more answers
ABC Corporation has declared a rights offering to stockholders of record on Friday, December 10th. Under the offer, shareholders
VashaNatasha [74]

Answer:

The value of a right is $1

Explanation:

10 rights are needed to buy 1 share at the price of $19

Value of total rights = $29 - $19 =$10

Value of a right = \frac{10}{10} = $1

4 0
3 years ago
I collect baseball cards. I do not sell any cards and I let my collection grow. The number of cards in my collection grows at 5%
Elena L [17]

Answer: 14.4 years

Explanation:

You can use the Rule of 72 to find out.

The Rule of 72 is a very useful formula that shows the amount of time it would take an amount to double given a certain growth rate.

The formula is:

= 72 / Growth rate in whole numbers

= 72 / 5

= 14.4 years

Approximately 14.4 years

7 0
3 years ago
2. A closer estimate of the total cost can be made by including the estimated sales tax. Use a formula to calculate the estimate
Kazeer [188]

Answer: Hello  your question has some missing details hence I will provide an answer based on the general scope of your question

answer ; =([Cost] * 1.07)

Explanation:

Assuming the table heading for estimated cost in July 2014 is named "Cost"

Total estimated cost

Total =  Cost * ( 1 + Sales Tax )

         = Cost * ( 1 + 0.07 )

         = Cost * 1.07

Excel  equivalent formula used that can be used  = ([Cost] * 1.07)

5 0
3 years ago
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