This question is incomplete, the complete question is;
We will derive a two-state put option value in this problem.
Data: S₀ = 106; X = 112; 1 + r = 1.12. The two possibilities for ST are 149 and 75.
The range of S is 74 while that of P is 37 across the two states. What is the hedge ratio of the put
Answer: the hedge ratio of the put H = - 1/2 ≈ - 0.5
Explanation:
Given that;
S₀ = 106, X = 112, 1 + r = 1.12
Us₀ = 149 ⇒ Pu = 0
ds₀ = 75 ⇒ Pd = 37
To find the Hedge ratio using the expression
H = Pu - Pd /Us₀ - ds₀
so we substitute
H = 0 - 37 / 149 - 75
H = - 37/ 74
H = - 1/2 ≈ - 0.5
Section 8 does not require you to pay them back
Answer:
20.19%
Explanation:
The computation of the sustainable growth rate is shown below:
The Sustainable growth rate is
= (return on equity × b) ÷ (1 - (Return on equity × b))
= (0.21 × (1 - 0.20) ÷ (1 - (0.21 × (1 - 0.20)))
= 0.168 ÷ (1 - 0.168)
= 0.168 ÷ 0.832
= 20.19%
basically we applied the above formula to determine the sustainable growth rate
Answer:
The correct answer is letter "A": Brazil only.
Explanation:
Comparative advantage is the ability of an organization or individual to produce at lower opportunity costs. This is achieved by introducing efficient productivity strategies or achieving economies of scale.
For the case given, the comparative advantage of Brazil and Chile is based on labor productivity only. Then:
- <em>The comparative advantage of Chile on sugar</em> =
= 0.4 - <em>The comparative advantage of Brazil on sugar </em>=
= 0.5
Thus, <em>Brazil has a comparative advantage over Chile on sugar.</em>
