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Mumz [18]
3 years ago
15

Assume stock A costs $100 at t = 0 in a two-period world. There are two scenarios at t = 1: good and bad. In the good scenario t

he stock price rises to 120 dollars and in the bad scenario stock price declines to 70. The probability of both these scenarios is p = 0.5. The annual riskless rate is 10%. Your broker offers you a call option with strike price of $110 for $4.60. Will you take up his offer? Why or why not?
Business
1 answer:
Arada [10]3 years ago
3 0

Answer:

The offer at $4.60 by the broker is higher than the calculated fair value of $4.545 hence i will not take up his offer

Explanation:

Given data:

stock A = $100 at  t = 0  

in two worlds : good scenario ; stock A  = $120

                         bad scenario ; stock A = $70

probability = 0.5

annual risk less rate = 10% = 0.1

To determine if to take the offer or not we have to calculate the call option using the given parameters

Cu = \frac{(0.5*10) + (0.5*0)}{(1 + 0.10)}  = $4.545

The offer at $4.60 by the broker is higher than the calculated fair value of $4.545 hence i will not take up his offer

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Martinez Company has an old factory machine that cost $66,000. The machine has accumulated depreciation of $36,960. Martinez has
brilliants [131]

Answer:

Journal entries

Explanation:

The journal entries are as follows

(a) Cash A/c Dr $33,000

   Accumulated depreciation A/c Dr $36,960

            To Factory machine A/c $66,000

            To Profit on sale of factory machine A/c $3,960

(Being the sale of machinery is recorded and the remaining balance is credited to the profit on sale of factory machine account)

(b) Cash A/c Dr $19,800

    Loss on sale of factory machine A/c $9,240

    Accumulated depreciation A/c Dr $36,960

            To Factory machine A/c $66,000

(Being the sale of machinery is recorded and the remaining balance is debited to the loss on sale of factory machine account)

8 0
3 years ago
Which scenarios can be considered effects of Sole Sister Shoe Store choosing to sell dress shoes over sneakers?
Harlamova29_29 [7]

I believe the answer is:

High school athletes stop shopping there.


The inventory of sports socks goes unsold.

High school athletes tend to need the type of shoes that help in their mobility and tend to posses high level of endurance. These characteristics do not exist in Dress shoes. When high school athletes stop buying their shoes on the store, the number of stocks in the inventories tend to stay stagnant since it could not find customers.

6 0
3 years ago
Read 2 more answers
Lindsay​ Electronics, a small manufacturer of electronic research​ equipment, has approximately 6 comma 800 items in its invento
Nitella [24]

Answer:

99 items

Explanation:

Total number of items = 6,800

The number of items per type is:

A= 6,800*0.08\\A=544\ items\\B= 6,800*0.34\\B=2,312\ items\\C= 6,800*0.58\\C=3,944\ items

The number of items of each type counted per day is:

n_A=\frac{544}{20}\\n_A=27.2\\n_B=\frac{2312}{59}\\n_B=39.2\\n_C=\frac{3944}{121} \\n_C= 32.6\\

The total number of items counted per day is:

n = n_A+n_B+n_C=27.2+39.2+32.6\\n=99\ items\ per\ day

6 0
3 years ago
Santoyo Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below:
USPshnik [31]

Answer:

The delivery cycle time was 26.9

Explanation:

The delivery cycle time is computed as:

Delivery cycle time = Wait time + Throughput time

where

Wait time is 13.6

The formula for computing the throughput time is as:

Throughput time = Move time + Process time + Queue time + Inspection time

where

Move time is 3.3

Process time is 2.7

Queue time is 7.0

Inspection time is 0.3

Putting values above:

Throughput time = 3.3 + 2.7 + 7.0 + 0.3

Throughput time = 13.3

Now, putting both the values above:

Delivery cycle time = 13.6 + 13.3

Delivery cycle time = 26.9

4 0
3 years ago
A typical grocery store in the United States may sell oranges grown primarily in California during part of the year and oranges
Rama09 [41]

In United States, the oranges are available round the year because the grocery stores sell oranges that are grown in locations with similar climates but different growing seasons.

<u>Explanation</u>:

Orange is a seasonal fruit. The growth of orange can be witnessed from November to April in the United States of America. The supply of orange will reach its peak during January-March.

Oranges are good source of vitamin C and are rich in nutrition. The antioxidant in the orange helps in lowering the risk of heart disease and kidney stones.

In United States, the oranges are available round the year because the grocery stores sell oranges that are grown in locations with similar climates but different growing seasons.

4 0
3 years ago
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