Answer:
i dont know sorry for dis but i dont know wat else to do
Answer:
$13.64
Explanation:
Given:
Exercise price,X = $100
Current price = $100
Value when price is up, uS = $120
Value when price is down, dS= $80
Risk free interest rate = 10%
First calculate hedge ratio, H:
Where,
Cu = uS - X
= 120 - 100
= $20
A risk free portfolio involves one share and two call options.
Find cost of portfolio:
Cost of portfolio = Cost of stock - Cost of the two cells.
= $100 - 2C
This portfolio is risk free. The table below shows that
_______________
Portforlio 1:
Buy 1 share $80; Write 2 calls: $0; Total: ($80 + 0) $80
____________________
Portforlio 2:
Buy 1 share: $120; Write 2 calls: -$40; Total: ($120 - $40) $80
Check for oresent value of the portfolio:
Present value 
Value = exercise price - value of option
$72.73 = $100 - 2C
Find call option, C
Call option's value = $13.64
Answer:
b. the purchasing power of their income is reduced.
Explanation:
Income effect is defined as the change in demand of a product that is a result of change in purchasing power of an individual, there are changes in real income.
When there is price increase the number of goods an individual's income can buy is reduced, so his purchasing power reduces. He will demand less of the good.
When there is a reduction in price purchasing power increases and customer can demand for more of the good.
In this scenario the increase in price of automobiles results in reduction in purchasing power, and reduction in amount demanded.
Answer:
c. 7 percent
Explanation:
The real interest rate will be net of the effect of inflation.
In this case we are givne with the principal and the amount.
We will solve for nominal rate first:
amount/ principal - 1 = rate
1,120/1,000 - 1 = 0.12
Now, we calculate the real rate of return. we subtract the inflation from the nominal to achieve the real rate.
nominal - inflation = real rate
0.12 - 0.5 = 0.07
The real interest rate will be of 0.07 = 7%
Answer:
$12,438
Explanation:
The amount cash received by Famous furniture = (20×$730) × (100%-7%) – $480 – $660
=$14,600×(1-0.07)-$1,140
=($14,600×0.93)-$1,140
=$13,578-$1,140
= $12,438
Therefore the amount of cash received by Crane furniture is: $12,438
