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AnnZ [28]
3 years ago
5

Discount factor is 0.985. Stock XYZ is selling for $40 a share. An American option on this stock with a strike price of $38 is t

rading at $0.25 per share. If it is known that this option is priced above its intrinsic value, what type of option is it?
Business
1 answer:
weqwewe [10]3 years ago
5 0

Answer:

Put option

Explanation:

We have current price 40dollars - strike price 38dollars = $2. The question says the stock is trading at $0.25 per share. Since 0.25 is higher than 0 it is a put option. And the intrinsic value is $2.

The put option gives one the right to sell a particular number of shares at a price that has been set which is referred to as the strike price before a certain date.

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Al, walks in off the street, says the grounds could use some sprucing up, and offers to do it for $8 an hour. Management gives h
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<u>Option B</u> must pay him as an employee, withhold appropriate taxes and issue a W-2 at year end

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On February 1, the Acts Tax Service received a $3,600 cash retainer for tax preparation services to be provided rateably over th
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$2,700

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= $3,600 ÷ 4 months

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3 years ago
The price elasticity of demand for beef is about 0.60. Other things equal, this means that a 20 percent increase in the price of
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Answer:

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Explanation:

Data provided in the question:

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Increase in the price of beef = 20%

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Ed = [ Percentage change in Quantity ] ÷ [ Percentage change in price  ]

or

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or

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or

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3 0
3 years ago
If the marginal propensity to consume in a municipality is 0.8, what is the value of the simple multiplier? If a new stadium tha
Pachacha [2.7K]

Answer:

(a) 5

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(c) 45 million

Explanation:

(a) Multiplier = 1 ÷ (1 - MPC )

                     = 1 ÷ (1 - 0.8 )

                     = 1 ÷ 0.2

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3 years ago
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