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motikmotik
3 years ago
13

J Corp. common stock is priced at $36.50 per share. The company just paid its $0.50 quarterly dividend. Interest rates are 6.0%.

A $35.00 strike European call, maturing in 6 months, sells for $3.20. What is the price of a 6-month, $35.00 strike put option
Business
1 answer:
viva [34]3 years ago
5 0

Answer:

Explanation:

The time (T) = 6 months = 6/12 years  = 0.5 years

Interest rate (r) = 6% = 0.06

The stock is priced [S(0)] = $36.50

The price the stock sells at 6 months (V_c) = $3.20

European call (K) = $35

The price (P) is given by:

P=V_c+K.e^{-rT}-S(0)+Dividends\\But, Dividends = 0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Therefore, P=V_c+K.e^{-rT}-S(0)+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\Substituting:\\P=3.2+35*e^{-0.06*0.5}-36.5+0.5*e^{-0.25*0.06}+ 0.5*e^{-0.5*0.06}\\P=3.2+33.9656-36.5+0.4926+0.4852\\P=1.64

The price of a 6-month, $35.00 strike put option is $1.65

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Answer: Degree of Operating Leverage

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Explanation:

As defined in question itself,

Degree of Operating Leverage = 1 + \frac{fixed\ cost}{Profit}

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Although the fixed cost differ by $1 million.

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3 years ago
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3 years ago
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The Lynx Manufacturing Company produces components used in electronic toys. In fiscal year 2017, Lynx earned an accounting profi
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Answer:

The correct answer is option B.

Explanation:

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The accounting profit involves only explicit costs. While economic profit includes both explicit as well as implicit cost.

Here, the implicit cost is the opportunity cost of producing toys components. Lynx could have earned greater profit if it produced components for mobile phone and also could have saved cost of production.

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A show statement is used by a database administrator to get details about the items in a database. A data dictionary has this information.

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