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Law Incorporation [45]
3 years ago
13

The exercise price of the options is $100 per share, all options are European, and the stock does not pay any dividend. The call

price is $25 per share and the put price is $17 per share. Both options mature in 2 years. Finally, the annual rate of interest is 5% with continuous compounding. What is the stock price today?
Business
1 answer:
defon3 years ago
3 0

Answer:

Stock Price is $98.70

Explanation:

given data

exercise price = $100 per share

call price = $25 per share

put price = $17 per share

mature time = 2 years

annual rate of interest = 5%

to find out

What is the stock price today

solution

we will use here Put Call Parity for find out Stock Price that is express as

C + \frac{100}{(1+r)^t} = S + P    .....................a

we know here that C is call price and r is rate and t is time and S is Stock Price and P is put price

so put all value in equation a

C + \frac{100}{(1+r)^t} = S + P

25 + \frac{100}{(1+0.5)^2} = S + 17

solve it we get

P = $98.70

so Stock Price is $98.70

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Gina writes and signs a check payable to "Happy Market." Irma, Happy’s manager, indorses the check "For deposit only." This is
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c.a restrictive indorsement.

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3 years ago
Colah Company purchased $2,400,000 of Jackson, Inc., 6% bonds at their face amount on July 1, 2021, with interest paid semi-annu
m_a_m_a [10]

Answer:

Dr bonds investment     $2,400,000

Cr cash                                                 $2,400,000

Dr cash                      $ 72,000.00  

Cr interest revenue                             $72,000.00  

Dr fair value adjustment  $ 340,000.00  

Cr unrealized gains                                     $340,000.00  

2022:

Dr cash                      $ 72,000.00  

Cr interest revenue                             $72,000.00  

Dr realized loss($2,160,000-$2,400,000)  $240,000

Cr fair value adjustment                                                      $240,000

sale of bonds:

Dr cash                        $2,160,000

Dr realized loss              $240,000

Cr bonds investment                               $2,400,000

Explanation:

Upon purchase of investment,the bond investments is debited with $2.4 million and cash credited with same amount

Interest revenue for last half year=$2,400,000*6%*6/12=$72,000.00  

unrealized gains=$2,740,000-$2,400,000=$340,000.00  

Interest for first half of 20222=$2,400,000*6%*6/12=$72,000.00  

7 0
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Suppose you manage the buyers at Best Bikes and you have been asked to help determine the requirements for a new vendor selectio
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6 0
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