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Svetach [21]
3 years ago
12

. The current price of a stock is $50. In 1 year, the price will be either $65 or $35. The annual risk-free rate is 10%. Find th

e price of a call option on the stock that has an exercise price of $55 and that expires in 1 year. (Hint: Use daily compounding.)
Business
1 answer:
Masteriza [31]3 years ago
4 0

Answer:

The correct answer will be "6.11008554". Further explanation is given below.

Explanation:

The given values are:

The current stock's price

= $50

Annual rate

= 10%

Exercise price

= $55

Expiry time

= 1 year

Now,

On applying the formula, we get

⇒  \frac{(MAX(65-55,0))-MAX(35-55,0)}{65-35}\times \frac{(MAX(65-55,0))-MAX(35-55,0)}{65-35}\times \frac{(MAX(65-55,0))-MAX(35-55,0)}{(\frac{1+10 \ percent}{365} )^{365}}⇒  6.11008554

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Answer:

Apple Photography, Inc.

Based on this information, the balance in the cash account at the end of January would be:_____.

b) $12,115.

Explanation:

a) Cash Account

Common Stock   $13,600

Insurance              (2,200)

Service Revenue   5,800)

Rent                       (1,600)

Office equipment (3,200)

Utilities                     (285)

Balance                $12,115

b) Apple Photography, Inc had a balance in the cash account at the end of January of $12,115 which was the difference between the cash inflows and cash outflows during the month.  The inflows represented cash received by Apple Photography  from the owners and customers and the cash paid for running the business.

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3 years ago
Which of the following should you NOT wear to an interview?
natulia [17]

Answer: I think Anything tight, bright, short, or sheer should absolutely be avoided.

Explanation:

5 0
2 years ago
Adam is a​ 25-year old Millennial who is considered a​ super-star manager at a technology company. He has been asked to hire a t
dmitriy555 [2]

Answer:

The correct answer would be, Stereotyping is the likely basis for Adam's decision.

Explanation:

Adam is a young adult of age 25. He is a successful manager in a technology firm. He is asked to hire a team of IT specialists. When reviewing the stack of applications for the desired post, he notices only one candidate who has an experience of over 20 years. He realizes that this person is almost the age of his father. And because he considers his father's IT and other learning skills as slow and outdated, he applies the same thinking and concept to that person and decides not to interview that person, just on the basis of his age and his thinking about old people. His thinking that old people are slow in learning and are not aware of the new IT trends and are outdated is called as Stereotyping, which means the image of someone or something based upon some own's assumption.

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3 years ago
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3 years ago
The Bethlehem Inn is an all-equity firm with 9,000 shares outstanding at a value per share of $26.80. The firm is issuing $39,93
IgorLugansk [536]

Answer:

Value of equity = 9,000 x $26.80 =  $241,200

Value of debt issued = $39.932

Value of equity after debt repayment = $241,200 - $39,932

                                                                          =  $201,268                                                                                                                                                                                                                                                                                

No of equity outstanding after debt repayment = <u>$201,268</u>

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                                                                               =  7,510 shares

Explanation:

In this regard, there is need to determine the value of equity after debt repayment, which is value of equity minus value of debt repaid. Then,we  will divide the value of equity after debt repayment by the value of equity per share. This gives the number of shares outstanding after debt repayment.

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3 years ago
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