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liubo4ka [24]
3 years ago
15

The current price of a stock is $50, the annual risk-free rate is 6%, and a 1-year call option with a strike price of $55 sells

for $7.20. What is the value of a put option, assuming the same strike price and expiration date as for the call option? Select one: a. $7.33 b. $7.71 c. $8.12 d. $8.55 e. $9.00
Business
1 answer:
Vlad [161]3 years ago
6 0

Answer:

The value of the put option is;

e. $9.00

Explanation:

To determine the value of the put option can be expressed as;

C(t)-P(t)=S(t)-K.e^(-rt)

where;

C(t)=value of the call at time t

P(t)=value of the put at time t

S(t)=current price of the stock

K=strike price

r=annual risk free rate

t=duration of call option

In our case;

C(t)=$7.2

P(t)=unknown

S(t)=$50

K=$55

r=6%=6/100=0.06

t=1 year

replacing;

7.2-P=50-55×e^(-0.06×1)

7.2-P=50-(55×0.942)

7.2-P=50-51.797

P=51.797+7.2-50

P=$8.997 rounded off to 2 decimal places=$9.00

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IgorLugansk [536]

Answer:

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Calculation of Adjusted cash Balance on 31 May:

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less: NSF Check                          <u> $ (420)</u>

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Add: Outstanding Checks           $ 6,500

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Explanation:

Bank reconciliation is a company document prepared in order to reconcile difference between balance as per cash book and balance as per bank statement.

The difference arise because of two reasons:

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6 0
2 years ago
Which one of the following actions by a financial manager is most apt to create an agency problem? Increasing current profits wh
MrRissso [65]

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Explanation:

The main purpose of a company is to increase the wealth of shareholders. In their capacity as stewards for the company, managers should be working therefore to achieve this goal.

When management neglects this goal and begins to seek an improvement in their welfare and wealth instead of the shareholder', this is an Agency problem.

If a Financial manager is increasing current profits even though doing so will lower the value of the company's equity, this can create an agency problem because the shareholders are suffering but the finance manager might get rewarded for increasing profits.

6 0
2 years ago
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Answer:

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$230,000 = $103,500 + Equity

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Return on equity = Net income for the year / Shareholders equity

ROE = $17,000 / $126,500 = 0.1344 = 13.44%

6 0
3 years ago
While on her way to work, rachel remembered that she forgot her phone at home. she then decided to paste a note on her house doo
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