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pshichka [43]
3 years ago
6

A put option on a stock with a current price of $47 has an exercise price of $49. The price of the corresponding call option is

$4.35. According to put-call parity, if the effective annual risk-free rate of interest is 5% and there are four months until expiration, what should be the value of the put? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Business
2 answers:
Sedbober [7]3 years ago
4 0

Answer:

The answer is 5.559539 or 5.56.

Explanation:

From the given question let us recall the following statements

The current price of A put option on a stock  = $47

With an exercise price of $49

Annual risk-free rate of annual  interest is = 5%

The  corresponding  price call option is = $4.3

The next step is to find the put value

Now,

The Call price + Strike/(1+risk free interest) The Time to maturity =

Spot + Put price

Thus

The,Put price = Call price - Spot + Strike/(1+risk free interest)Time to maturity

When we Substitute the values, we get,

Put price = (4.35 - 47) + 49/1.05 4/12

Therefore, The  Put Price = 5.559539 or 5.56

notsponge [240]3 years ago
4 0

Answer:

The Put Value of the stock is 5.55

Explanation:

To compute the Put Price;

Therefore,

Put price = \frac{Exercise Price}{(1+ risk free interest)^{Maturity Time}} + Call Price - Current Price

By substituting the value in the formula  

Put Price = 4.35 + [49 / (1 + 0.05)^{4/12}] - 47

Put Price = 4.35 + [49 / (1.05)^{4/12}] -47

Put Price = 4.35 + [49 / 1.02] -47

Put Price = 4.35 + 48.21 – 47

Put Price = 5.55

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In a minimum 200 words explain the idea behind the balance of power. How did this concept play itself out in Europe? How was thi
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It meant a political situation among the states in which none of them achieved a power superior to the others. It is an idea of the late Middle Ages, applied to major or minor geographic regions that comprise the plurality of sovereign territories. Throughout Europe there is a legitimate feeling, always subject to interpretation, whereby any action required the confirmation of the rest of the States, the most significant case being the invasion of a territory. In this way the doctrine of just war was reached, to the problem of to what extent and to what extent the actual or imminent engraving of a State could mean a warlike justification. Transactions between contestants, neutral or rival, never ended, hence the relevance of diplomacy, as the concepts of balance, neutrality, freedom of Europe or sovereignty are interpreted continuously, while being used in conversations. Some thought of equilibrium as a natural system, because it was a consequence of international relations, and when a great power had too much force it threatened the others, and therefore, had to counteract the disproportion. Others considered it a desired goal for which he had fought.

In the rest of the world this balance of powers is characterized by the profusion of dictatorial or authoritarian regimes that have dominated the political scene and that have influenced the future of their peoples. A second point is the emergence of serious and bloody war conflicts, by territorial issues, which is not explained very well both in its unleashing and in its results, as consequences of the mere quantification of the powers faced. In all these, both in its gestation and its consequences, the role it plays in the character, personal ambitions and strategic conceptions of the leaders or rulers who govern the destinies of the countries involved appears with particular relevance.

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3 years ago
Determine the missing amounts. (Round answers to 0 decimal places, e.g. 1,225.) Unit Selling Price Unit Variable Costs Unit Cont
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Answer:

Unit Selling Price     Unit Variable Costs    Unit Contribution  Margin Contribution Margin Ratio

1. $570 $420    

Unit Contribution  Margin= Unit Sales Price Less  Unit Variable Price =

$ 570- $ 450 = $150 (a)

Contribution Margin Ratio = Contribution Margin/ Sales = 150/570* 100= 26 % (b)

2. $490      $490 -$130= $360 (c) $130        ($ 130/ $490)* 100= 27 % (d)

3. $23000 (e) $22540 (f) $460 2

Unit Contribution  Margin $460

Contribution Margin Ratio  2

Contribution Margin Ratio= Unit Contribution  Margin/Sales=  $460/ Sales  =2 %

$460/ Sales  =2 %

Sales = $ 460/2%= $ 23000

Sales - Unit Contribution  Margin = $ 460

Unit Contribution  Margin= Sales- $460 = $ 23000- $ 460= $ 22540

4 0
3 years ago
You have $2,000 today in your savings account. How long must you wait for your savings to be worth $4,500 if you are earning 1.2
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Answer:

n= 65.27 years

Explanation:

Giving the following information:

Present value (PV)= $2,000

Future value (FV)= $4,500

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<u>To calculate the number of years required to reach the objective, we need to use the following formula:</u>

n= ln(FV/PV) / ln(1+i)

n= ln(4,500 / 2,000) / ln(1.0125)

n= 65.27 years

3 0
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