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A call option on IBM has an exercise price of 100, the share price S is 120. The option will exprie in 6 months, and the riskfree rate is 10% p.a. and the historical variance of the returns of IBM is 12% p.a. Before the option expires, IBM is expected to pay 2 regular dividends of $2 per share at the end of teh second month and the fifth month. Please determine the prices of this IBM call option if it can be exercised prior to maturity.
Using a PW approach determine the maximum amount Fabco should be willing to pay for the valves and how many days/year must the truck's services be needed such that the two alternatives are equally costly?
You expect to receive $3,000 in 3 years (i.e., end of year 3). Then you plan to invest it earning 5% per year. SHOW ALL WORK using TVM buttons on the TI BAII Plus Calculator. What will you have at the end of year 8? You are presented with an investme..
If a firm factors their accounts receivable with recourse, then they are still liable if their customer doesn’t pay. If a firm has a Floating Lien, then they are prohibited from selling their inventory. If a firm pledges their Accounts Receivables, t..
A 10 year maturity bond with a coupon rate of 6.25% and face value of $1,000 makes semi-annual coupon payments. What is the bond’s yield to maturity if the bond is selling for: Large Industries annual bonds are selling at 102 (i.e., the price is $1,0..
W.L. Brown purchased a new large Chevrolet truck from Days Chevrolet. The truck had been manufactured by General Motors Corporation. One month later, an employee of Brown’s was operating the truck when it ceased to function in rush-hour traffic on In..
Debt-to-Equity Ratio Will Able Corporation's balance sheet showed the following amounts: Current Liabilities, $24,505; Bonds Payable, $18,000; Lease Obligations, $24,183; and Notes Payable, $6,595. Total stockholders' equity was $36,100. Required: Wh..
You want to borrow $72,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,300, but no more. Required: Assuming monthly compounding, what is the highest rate you can afford on a 72-month APR loan?
Suppose you have $30,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $50 per share. You also notice that a call option with a $50 strike price and six months to maturity is available. What is y..
What do you suggest as an optimal dividend policy for both Phoenix and Denver that might lead to increases in both of their share prices? What are the limitations of your suggestions?
AB is in financial difficulty and has asked its bondholders to accept the following deal. The firm would like to make the next two payments of half the scheduled amount, and make the last two payments of twice the scheduled amount. If this plan is im..
Trust Bankers just paid an annual dividend of $1.9 per share. The expected dividend growth rate is 6.7 percent, the discount rate is 12 percent, and the dividends will last for 8 more years. What is the value of the stock? If the return on equity for..
Describe the three basic tpyes of IRA's (traditional, roth and nondeduductible, including their respective tax feature and what it takes to qualify for each. Which is most appealing to you personally? Explain.
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