1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
luda_lava [24]
3 years ago
11

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?
Business
1 answer:
wariber [46]3 years ago
6 0

Answer:

$9.00.

Explanation:

The computation of the value of a put option is shown below:

Data provided in the question

Current price of the stock = $50

Risk free rate = 6%

Strike price = $55

Sale price = $7.20

Based on the above information

The value of put option is

Put = V - P + X exp(-r t)

= $7.20 - $50 + $55 e RF  - 0.06(1)

= $7.20 - $50 + $51.80

= $9.00

Hence, the value of put option is $9

You might be interested in
The Wayne City Council approved and adopted its budget for 2016. The budget contained the following amounts: Estimated revenues
Vilka [71]

Answer: The budgetary fund balance is $10,000

Explanation: When calculating budgetary fund balance, the best method is given as:

The available fund balance (from previous audit) + current year revenues = Total available funds - expenditures = current year ending fund balance

What we can see from the above expression is that we add the fund from the previous year balance to the current year revenues. This will give us amount of total funds available. Now we will minus the current year expenditures from the total funds available to give us the budgetary fund balance of the current year.

From the question above, we have the following:

Estimated revenues = $700,000

Appropriations (expenditures) = $660,000

Debt service = $30,000

Total expenditures = $660,000 + $30,000 = $690,000

Therefore budgetary fund balance will be:

Estimated revenues - total expenditures

= $700,000 - $690,000

= $10,000

Therefore, the budgetary fund balance is $10,000.

4 0
3 years ago
Rosseta Technologies, an information technology service provider to a company based out of Germany, allows its employees to work
kondaur [170]

Answer: A.) An enterprise search software

Explanation: Placing restrictions on the search or retrieval of confidential data or information may be enforced through the use of an enterprise search software. The enterprise search software enables the retrieval of information or data from databases and other enterprise-level sources while also ensuring that these informations or data are made available to a defined audience or population by following carefully defines rules and compliance procedures in other to ascertain security of organizational data and information.

5 0
2 years ago
Violet, William, and Xavier are partners in a partnership that sells medical devices. Violet and William each contributed $100,0
mafiozo [28]

Answer:

d. purchase the machine because each partner has one vote in management matters

Explanation:

Since in the question it is mentioned that the partners vote whether or not to buy a new machine for $100 so the violet and William would agree on this but Xavier does not agree

Now according to this situation the machine should be purchased as each partner vote is necessary also there is a majority of 2 person to buy the machine

hence, the option d is correct

8 0
3 years ago
ERP success depends on several key factors being met. These factors include all of the following except _________. Select one: a
bonufazy [111]

Answer:

a. Minimize change for workers

Explanation:

Enterprise Resource Planning (ERP) is a method adopted by most companies to manage and integrate the various part of their business. This ERP is based on the usage of software for easier deployment of the integration and it depends on so many factors.

<em>An ERP software system can also integrate planning, purchasing inventory, sales, marketing, finance, human resources, and more of any given business enterprise.</em>

7 0
3 years ago
Oscar owns a building that is destroyed in a hurricane. His adjusted basis in the building before the hurricane is $130,000. His
damaskus [11]

Answer:

That is $2,000 loss

Explanation:

After the hurricane Oscar received $140,000 for his loss, the adjusted basis for his property was $130,000 so he had a gain of 140,000- 130,000=$10,000.

According to Sec. 1033(a)(2) since the new property that was built (the replacement) was similar we will recognise the amount received from the insurance company ($140,000) to the extent that it pays for the replacement property.

That is

Gain or loss = amount paid by insurance company- cost of replacement property

Gain or loss= 140,000- 142,000

Gain or loss= -$2,000

That is $2,000 loss

8 0
2 years ago
Other questions:
  • Of the 4,092 pedestrian fatalities nationwide in 2009, __________ were Floridians. A. 2% B. 11% C. 19% D. 22%
    9·1 answer
  • Which solver report type displays various statistical characteristics about the model?
    11·1 answer
  • A binding price ceiling on apartments (effective rent control) will:
    9·1 answer
  • At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $7,2
    5·1 answer
  • Summarize what is a mutual fund!
    11·1 answer
  • Splish Brothers Inc. reported a net loss of $14400 for the year ended December 31, 2022. During the year, accounts receivable de
    12·1 answer
  • Joe obtained a box of antique Lenox china dishes that had been left at the town dump. He supplemented the sizeable buy incomplet
    13·1 answer
  • Which of the following statements does not correctly describe an adjustment to net income when determining cash flows from opera
    8·1 answer
  • Which of the following serves as an incentive for entrepreneurs in a market economy?
    5·1 answer
  • Of all leadership variables, _____ leadership is the one most universally endorsed across cultures.
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!