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trapecia [35]
3 years ago
13

A tree is constructed to value an option on an index which is currently worth 100 and has a volatility of 25%. The index provide

s a dividend yield of 2%. Another tree is constructed to value an option on a non-dividend-paying stock which is currently worth 100 and has a volatility of 25%. A. The parameters p and u are the same for both trees B. The parameter p is the same for both trees but u is not C.The parameter u is the same for both trees but p is not D. None of the above
Business
1 answer:
ZanzabumX [31]3 years ago
4 0

Answer:

A. The parameters p and u are the same for both trees

Explanation:

Calculation of parameters of u(upper limit) and p(lower limit) for both index and stock:

1) INDEX

Current Value: 100

Volatality : 25%

Value can increase upto 100+25% = 125

Value can decrease to 100-25% = 75

U = Value after increase/current value = 125/100 = 1.25

P = Value after decrease/ current value = 75/100 = 0.75

2) STOCK

Current Value: 100

Volatality : 25%

Value can increase upto 100+25% = 125

Value can decrease to 100-25% = 75

U = Value after increase/current value = 125/100 = 1.25

P = Value after decrease/ current value = 75/100 = 0.75

---> The parameters U and P for both index and stock are same. This is because both the index and stock has  same value and same volality rate. Therefore, stock move according to the index.

if index changes by  certain percentage the stock also changes. Here in this case, volatality rate is same for both index  and stock. Hence Parameters U and P are same for Index and Stock.

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Wilson has a 40 percent interest in the assets and income of the CC&W Partnership, and the basis in his partnership interest
laila [671]

Answer:

a. $24,000

b. $9,000

Explanation:

a. The amount of income or loss from the partnership is limited to the share of the loss rather than its partnership interest

In the given case, the partnership interest is $45,000 and the share of his loss is $24,000

So, $24,000 is reported in his individual income tax return

b. The computation of the Wilson's basis in his partnership interest is shown below:

= Basis in his partnership interest - share of the loss -  cash distribution received from the partnership

= $45,000 - $24,000 - $12,000

= $9,000

3 0
3 years ago
Heavy​ Products, Inc. developed standard costs for direct material and direct labor. In​ 2017, AII estimated the following stand
Nitella [24]

Answer:

Direct labor efficiency variance= 0

Explanation:

Giving the following information:

Direct labor 0.2 hours $ 35 per hour. During​ June, Heavy Products produced and sold 16,000 containers using 3,200 direct manufacturing labor-hours at an average wage of $ 51.00 per hour.

Direct labor efficiency variance= (Standard Quantity - Aactual Q)*standard rate

Direct labor efficiency variance= (0.2*16,000 - 3,200)*35= 0

5 0
3 years ago
Francis interviews two candidates for an administrative assistant position that will require a fair amount of project management
sp2606 [1]

Answer: Applicant's cognitive abilities

Explanation:

Cognitive ability could be defined as mental skills we need to projects or given activities within any capacity they would come. Cognitive ability looks at out ability to answer questions, learn, remember and pay attention.

It could also be seen as the ability of someone to perform different mental task where learning and solving problems are involved. Considering the interview, Francis would choose or make his choice based on how both candidate are able to solve problems and their approach to it.

6 0
3 years ago
Which of the following statements is the most correct regarding errors and fraud? Group of answer choices Errors are always frau
Sergio039 [100]

Answer:

An error is unintentional, whereas fraud is intentional.

Explanation:

Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP).

An auditor refers to an authorized individual who review, examine and verify the authenticity and accuracy of business financial records or transactions.

Thus, an audit of historical financial statements most commonly includes the balance sheet, income statement, statement of cash flows, and the statement of changes in stockholders' equity.

Hence, the statement which is the most correct regarding errors and fraud is that, an error is an unintentional that can happen to any financial expert, whereas fraud is intentional.

3 0
2 years ago
The acts of receiving shipments, breaking down shipments, repackaging shipments, and distributing components to a manufacturing
ehidna [41]

Answer: Cross docking

Explanation:

The cross docking is one of the logistics procedure in which the various types of goods and the services are directly distributed from supplier to the consumers.

The main aim of the cross docking process is that it helps in increase the efficiency in the supply chain and it is used for handling the inventory system.

It is the process in which the the shipment are received, repacking of the shipments and then it is supply to the customers by the distribution center.

Therefore, Cross docking is the correct answer.  

6 0
3 years ago
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