Answer:
a) $8
b) $4
c) Decrease
Explanation:
Background.
A call option as you probably know, is an agreement to buy an asset on or before a particular day at a price already determined in the agreement.
a) the Intrinsic value of the option is the market price minus the strike price.
Intrinsic Value = Market Price - Strike price
= $43 - $35
= $8 per share.
It is worthy of note that for an option, of the intrinsic value dips into negative figures it is just said to be 0.
b) To calculate the time value, we subtract the intrinsic value from the call premium
= Call Premium - Intrinsic value
= $12 - $8
= $4
c) The call option has 6 months to maturity and the dividends are to come in 3 months. Share prices usually drop after a dividend has been paid so because the call option matures in 6 months, the price of the call option will DECREASE owing to the Expected drop in stock price.
Answer:
Form Utility
Explanation:
Keithet Corp. is utilising the materials from the plastic waste. The utility is the process which is used for increasing the product attractiveness for the consumers through altering the physical appearance. This will involve making a product through converting it to a form which is beneficial to consumers. Therefore, the corp. uses the plastic blocks which is a substitute the bricks, to plastic nails for the carpentry.
Answer:
option (e) 13.95%
Explanation:
Data provided in the question:
Dividend paid, D0 = $6 per share
Current selling price = $80 per share
Dividend growth rate = 6% = 0.06
Now,
Cost of equity = [ D1 ÷ Current price] + Growth rate
= [ ( D0 × (1 + g) ) ÷ $80 ] + 0.06
= [ ( $6 × (1 + 0.06) ) ÷ $80 ] + 0.06
= [ 6.36 ÷ $80 ] + 0.06
= 0.1395
or
= 0.1395 × 100%
= 13.95%
Hence,
The correct answer is option (e) 13.95%
