Answer:
$1.70
Explanation:
Given that,
Current stock price= $40
Strike price= $39
After a period of one month, two states will be achievable.
- First state
Stock price=$42
Option value= 42-39
=$3
- Second state
Stock price= $38
Option value= 0
Upmove size of first state is
U= 42/40 =1.05
Downmove size of the second state is
D=38/40=0.95
The values given for the upside probability is given as:
Rf= 0.08
t= 1/12
πu = 0.567
The downside probability is equal to:
= 1 - 0.567
= 0.433
Therefore, the present value of option is:
(0.567 × 3) + (0.43 × 0) / e^0.08 × 1/12
= 1.70
Thus, the value of a one-month European call option is $1.70
Answer:
The lower rate is when you put it into your credit card.
Explanation:
Credit card: rate = (1 + 15%/12)^12 - 1
EAR = 16.08%
Parents loan = ( 1 + 8%)^2 - 1
EAR parents = 16.64%
Therefore, The lower rate is when you put it into your credit card.
15. Unemployment is closely watched by the government due to the fact that the amount of people in the U.S that are bringing in revenue, effects the economy.
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Answer: Double taxation of dividend
Explanation: Double taxation of dividends refers to the taxes paid on dividends. Tax is first paid on the portion of the profit realized by a corporation which is to be shared among the shareholders. This portion of the corporation's profit is called dividend and the tax paid by the corporation is called the corporate income tax. After the dividends has been shared, each shareholder then pays a personal income tax on the respective amount received as dividend.
