Answer:
Possible options:
A. 38
B. 40
C. 42
D. There is no arbitrage opportunity.
Answer is B
Explanation:
With the given data, the no-arbitrage futures price should be; 800e(0.025-0.03)*0.50 =798−Since the market price of the futures contract is lower than this price there is an arbitrage opportunity. The futures−contract could be purchased and the index sold.−
Arbitrage profit is 798 - 758 = 40
Sorry but what is the question?
Answer:
It then means that there was an increase in price of <em>$0.35 and an increase in the Consumer Price Index of 122</em> of Soda after 37 years for inflationary reasons.
Explanation:
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
<em>Solution</em>
<em>CPI = New Price/ Old Price</em>
<em>Where:</em>
<em>Old Price = $0.15</em>
<em>New Price = $0.50</em>
<em></em>
<em>∴ = 0.50/0.15 </em>
<em>CPI = 3.33</em>
<em>Then there was no significant rise on inflation since the CPI for 37 years was 3.33 </em>
Answer:
Diluted earnings per share is $1.38
Explanation:
The earnings per share =earnings for common stock/number of common stock
However,the diluted earnings considers a situation where the bonds as if the bonds have been converted to common stock,hence the after tax interest payment on the bonds would be saved by increasing net income attributable to common stock and the number of common stock also increase at the same time with the possible number of stocks issued in place of bonds.
diluted earnings per share=$3,000+($21,000*2%*(1-25%)/1200+1200
=$3315/2400=$ 1.38