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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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Which of the following statements about the Consumer Decision Process is false?
Harman [31]

Answer:

The answer is: A) In a successful purchase, every stage in the process has to happen.

Explanation:

Sometimes we as customers don´t have the time or are unable to follow all the stages in the consumer decision process. Many times it depends on what need we want to satisfy. For instance, if we are hungry or thirsty we might decide to eat at the first restaurant we find. It doesn´t mean we made a bad choice, it simply happened that way because we didn´t have time to research about all the restaurants in the area and then evaluate and decide which one was the best for us. Many daily purchases are part of our daily routine. Imagine how many hours we would spend at a grocery store if we had to follow every step of the process.

On the other hand, if I´m searching for a new house, I will follow steps one through five several times, over and over again until I finally decide which house to buy.

7 0
3 years ago
Suppose during 2017 that Federal Express reported the following information (in millions): net sales of $34,450 and net income o
Ronch [10]

Answer:

The asset turnover is 1.44 and return on assets is 0.37%

Explanation:

Average Total assets    

Assets in the beginning $24,590  

Assets at the end          $23,300  

Average assets          $23945

Sales                   $34,450  

Divide: Average assets        $23945  

Assets turnover ratio  1.44

Net Income                   $89

Divide: Average assets          $23945  

Return on assets           0.37%

Therefore, The asset turnover is 1.44 and return on assets is 0.37%

3 0
3 years ago
A production manager is evaluated based on the quantity of direct materials used in production. If the production line actually
Shalnov [3]

Answer:

1) True

2) D. Total fixed costs

Explanation:

1)  The manager's evaluation should be based on a flexible budget, so the statement is true.

The standard quantity of direct materials used should be based on actual production for a correct variance analysis.

2 ) Total fixed costs remains the same when comparing a flexible budget to a master budget.

Total fixed costs do not change in total within relevant range of production.

3 0
3 years ago
Dividends cause a(n) increase/decrease)_________ in equity and are recorded directly in
Artyom0805 [142]

Answer:

Decrease (debit) in equity, Cash Dividends Payable (credit, liability account)

Explanation:

The journal entry to record the declaration of the cash dividends involves a decrease (debit) to Retained Earnings (a stockholders' equity account) and an increase (credit) to Cash Dividends Payable (a liability account).

(opentextbc.ca)

6 0
3 years ago
A stock has a market price of $46.10 and pays a $2.40 annual dividend. what is the dividend yield? 4.13 percent 4.84 percent 5.2
hichkok12 [17]
To solve:
Dividend yield = Annual Dividend / Market Price
Dividend yield = $2.40 / $46.10
Dividend yield = 0.0521
Then we are going to multiply by 100 to get the total in a percent
Dividend yield percent = (0.0521)(100)
Dividend yield = 5.21%
6 0
2 years ago
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