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
adell [148]
2 years ago
7

You wish to buy a Euro Call Option expiring in 6 months with a strike price of $1.35. The volatility of the $/Euro exchange rate

is expected to be 8.36% on an annualized basis. Currently the interest rate on the euro is currently 0.00% whereas it is 1.5% on the dollar. What is the price of this call option? What is corresponding Put Option worth? What happens to the price of both the Call and Put Option when the volatility goes to 10%. What are the new prices? What happens to the price of both the Call and Put Option as we get closer to the expiration date? What is the new price of the call if no other factors change but we are 3-months away from expiration?
Business
1 answer:
Dimas [21]2 years ago
3 0

Answer and Explanation:

Assuming Spot rate for EURUSD is $1.2328, the price of Call option is $0.0026 and and the corresponding Put option is $0.1099.

When Call option near maturity, price starts decreasing and nears 0 just before maturity, since it is about to mature and the time value goes on decreasing - price of the option is based upon majorly the intrinsic value. Price of Put option increases as and how it nears maturity.

At maturity = 3 months, price of Call option is $0.0003 and Put option is $0.1126.

Considering all other parameters being same, if volatility increases to 10.0%, price of Call option is calculated at $0.0052 and that of a Put option is $0.1124.

You might be interested in
Amberjack Company is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. The company has alw
svetoff [14.1K]

Answer:

Results are below.

Explanation:

Giving the following information:

Estimated Value Actual Value

Manufacturing overhead cost $732,000 $842,000

Direct labor hours 14,640 hours 16,600 hours

<u>To calculate the predetermined manufacturing overhead rate we need to use the following formula:</u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 732,000 / 14,640

Predetermined manufacturing overhead rate= $50 per direct labor hour

<u>Now, we can allocate overhead:</u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 50*16,600

Allocated MOH= $830,000

<u>Finally, the over/under allocation:</u>

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 842,000 - 830,000

Underapplied overhead= $12,000

8 0
3 years ago
Companies use mail merge to send out advertisements to possible customers.<br><br> True<br> False
algol13
The         answer          is             true                           ψψψψψψψψψψψψψψψψ    
5 0
3 years ago
Read 2 more answers
A market where tenants negotiate rent and other terms with property owners or their managers is referred to as a:_________
goldfiish [28.3K]

A user market is one where tenants bargain rent and other conditions with property owners or their managers.

<h3>What are Business User Markets?</h3>

Several other user markets also make purchases, either for their own consumption or with the goal of redistribution to others, in addition to selling finished goods and services to supply chain organizations. When making these purchases, the buyer typically does not significantly alter the goods from their original state. Although technically these markets are also a component of the supply chain, the majority of business users do not actively participate in or directly support production.

Any method that lets customers get involved in a marketing effort is known as user-generated marketing. User-generated marketing is just as much a kind of public relations as anything else because it gives a target audience a more participatory and interesting experience.

To know more about Business User Markets, visit: brainly.com/question/25492268

#SPJ4

4 0
1 year ago
Seybert Systems accounts for its investment in Wang Engineering bonds as available-for-sale. Seybert's balance in accumulated ot
MaRussiya [10]

Answer:

Seybert purchased the Wang investment for $173,000

Explanation:

Since there is a credit balance. It means the stock is increased in value by $27,000. So that the stock was purchased at $173,000 ($200,000-$27,000).

3 0
2 years ago
Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $9
Leviafan [203]

Answer:

Debit cash $7800

Credit unearned revenue $7800

Explanation:

The amount of $7800 was received in cash on October 1. Therefore, the cash account will be debited with the $7800 received.

The corresponding credit entry of $7800 will be to the unearned revenue account since the revenue has not been earned. Revenue will be earned at the end of each month of the lease. This account will subsequently debited each time the revenue is earned i.e at the end of each lease month.

3 0
3 years ago
Other questions:
  • Danny is using the menus for the first time. In six to eight sentences, give Danny directions about what he needs to know about
    5·1 answer
  • Which accounts are affected in the closing process under a perpetual inventory system?
    14·1 answer
  • Increasing your 401k deduction will ________ your take-home pay and __________ your federal taxes in the current year.
    15·1 answer
  • Grizzly Company had Retained Earnings at December 31, 2018 of $210,000. During 2019, the company had revenues of $410,000 and ba
    15·1 answer
  • What are the four different types of trade barriers
    13·1 answer
  • Data for Hermann Corporation are shown below:
    9·1 answer
  • Kit-N-Sit and Kittysitters are two cat-sitting services in Kent, Ohio. There are no other cat-sitting services, so the market is
    10·1 answer
  • Domestic producers experience limited import competition when a VER is in place. As a result, these producers make extra profit
    7·1 answer
  • What type of contract is a hire purchase agreement?
    15·1 answer
  • What education do you need for high school
    12·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!