Answer:
The value of the six-month European call option is 6.96
Calculations:
After 6 months the option value would be either $12 (for stock price of $60) or $0 (for stock price of $42).
Let us consider a portfolio of
+Δ shares
-1: option
The value of this portfolio is either 4Δ or (60Δ - 12) in 6 months.
Now,
if 42Δ = 60Δ - 12,
then,
Δ = 0.6667
The value of the portfolio is 28 (60×0.6667 - 12).
The portfolio is risk-less for this value of Δ.
Current value of the portfolio = 0.6667×50 - f, where f is the value of the option.
As the portfolio must earn the risk-free rate of interest
Thus,
(0.6667×50 - f) 
= 28
Or
f = 6.96
Let p be the probability of an upward stock price movement in a risk neutral world.
Therefore,
60*p + 42*(1 - p) = 50*
Or
p = 0.616212629
The value option in a risk neutral world is
12*0.6161 + 0*0.3839c = 7.3932
which has a PV of 
= 6.96
Answer:
B. debit Accounts Receivable $350 and credit Unearned Service Revenue $350
Explanation:
When the check was received for services yet to be performed, an asset in form of cash is recorded as well as a liability in form of deferred revenue. If the bookkeeper for Sebadoh Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger.
To correct this entry, the amount credited to account receivable would be reclassified to Unearned or deferred revenue. by debiting accounts receivables and crediting unearned/deferred revenue.
Answer and Explanation:
There are three main accounting elements that are as follows
1. Assets: Assets means the resources that are owned through which the future benefits would be anticipated. It is a properties owned by the business
2. Liabilities: The liabilities are the obligations that the company or an individual have to pay
3. Equity: The equity is the amount invested in the business, it also records the withdrawals, income and expenses etc
Now the accounting equation would be
Total assets = Total liabilities + total equity
The sum of total liabilities and total equity is known as total assets
Shawn has $10 which is $3 more than twice as much as Peter has
p= Peter's money
10=2p +3
-3 -3
7=2p
3.50=p
so Peter has $3.50
hope this helps!!
Answer:
Case A $581,757.17
Case B $500,000.00
Case C $416,910.21
Explanation:
Current price of a bond
The market price of a bond can be computed using the pv formula in excel, which is given as :
=pv(rate,nper,pmt,fv)
Where rate is the yield to maturity on the bond divided by 2 since the bond in question is semi-annual interest paying bond i.e
Case A 4%/2=2%
Case B 6%/2=3%
Case C 8.5%/2=4.25%
The nper is the time to maturity of the bond multiplied by 2 for the same reason cited for yield to maturity i.e 10 years *2=20
The pmt is the semi-annual coupon interest payable by the bond i.e 6%/2*$500,000=$15,000
The fv is the future value of the bond given as $500,000
Case A
=-pv(2%,20,15000,500000)
Pv= 581,757.17
Case B
=-pv(3%,20,15000,500000)
PV=$$500,000.00
Case C
=-pv(4.25%,20,15000,500000)
PV=$416,910.21
