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Anna11 [10]
4 years ago
11

A one-month European put option on a non-dividendpaying stock is currently selling for $2.50. The stock price is $47, the strike

price is $50, and the risk-free interest rate is 6% per annum. What opportunities are there for an arbitrageur?When will the put be exercised?
Business
1 answer:
Oksanka [162]4 years ago
8 0

Answer:

In

this case the present value of the strike price is 50e =49.75e

Because

25<49.7547.00

The condition in equation (10.5) is violated. An arbitrageur should borrow $49.50 at 6% for one month, buy the stock, and buy the put option. This generates a profit in all circumstances.If the stock price is above $50 in one month, the option expires worthless, but the stock can be sold for at least $50. A sum of $50 received in one month has a present value of $49.75 today. The strategy therefore generates profit with a present value of at least $0.25. If the stock price is below $50 in one month the put option is exercised and the stock owned is sold for exactly $50 (or $49.75 in present value terms). The trading strategy therefore generates a profit of exactly $0.25 in present value terms

Explanation:

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Many women are still hampered by a glass ceiling or an invisible barrier that limits their ability to progress to more senior positions.

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Feminists originally used the metaphor to describe obstacles high-achieving women face in their jobs.

In the US, the phrase is occasionally used to describe barriers that prevent minority women as well as minority males from moving up the social ladder. Due to their interaction with two historically oppressed groups—women and people of color—minority women in white-majority nations frequently experience the most difficulties in "breaking the glass ceiling."

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In the past, work was organized into central buildings located in central locations (like cities) in order to facilitate face-to
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Telepresence unveil the likelihood that international firms can be accomplished far more expeditiously, with abundant fewer trade and administration travel, and through larger preciseness and hustle, than is presently the circumstance. At intervals a rustic, there would be abundant fewer would like for big integrated headquarters. Employment, that already defines the effort exists of ample Americans, develops an additional accurate possibility for workers.

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3 years ago
A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change
Ierofanga [76]

Answer:

b. −1.79 percent

Explanation:

You can solve this using a financial calculator. I'm using TI BA II plus ;

First, find Price of the bond if YTM = 5.5%. Since it is semi-annual, adjust the YTM  and total duration;

N = 13*2 = 26

I/Y = 5.5%/2 = 2.75%

PMT = (6%/2)*1000 = 30

FV = 1,000

CPT PV = $1046.01

Next, find Price of the bond if YTM = 5.7%.

N = 13*2 = 26

I/Y = 5.7%/2 = 2.85%

PMT = (6%/2)*1000 = 30

FV = 1,000

CPT PV = $1027.28

Percentage change =[ (New price- Old price)/Old price] *100

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3 years ago
If actual gdp is $340 billion and there is a positive gdp gap of $20 billion, potential gdp is:
expeople1 [14]
$320 billion potential gdp
8 0
4 years ago
O'Neill, Incorporated's income statement for the most recent month is given below. The marketing department believes that a prom
Nesterboy [21]

Answer:

$1,800

Explanation:

Here Decrease or increase can be calculated as under:

Increase in Revenue                                                           $15,000

Increase in Variable Cost (72k / 100k * $15,000)             ($10,800)

Increase in Promotional Cost                                           <u>  ($6,000)  </u>

Net Operating Income Decrease                                        ($1,800)

Hence the decrease in Net Operating Income would be by $1,800.

Note: As the complete question is not provided and is not found online, almost similar question was picked from the internet. So make sure you account for of the differences.

The Numerical section of the question is given as under:

8 0
3 years ago
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