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A call option is currently selling for $5.40. It has a strike price of $80 and seven months to maturity. The current stock price is $82, and the risk-free rate is 2.9 percent. The stock will pay a dividend of $1.45 in two months. What is the price of a put option with the same exercise price? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Price of a put option $
Stock A's stock has a beta of 1.30, and its required return is 12.00%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.)
Titan Mining Corporation has 9.3 million shares of common stock outstanding and 370,000 6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $41 per share and has a beta of 1.15, and the bonds have 20 ye..
East Coast Television is considering a project with an initial outlay of $X (you will have to determine this amount). It is expected that the project will produce a positive cash flow of $45,000 a year at the end of each year for the next 14 years.
Compact fluorescent lamps (CFLs) have become required in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $.41 and lasts for 1,000 hours. You require a return of 9 percent and use a light fixture..
The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer’s base price is $1,080,000, and it would cost another $22,500 to install it. The machine falls into the MACRS 3-year class, and it would be sold af..
The owners’ equity accounts for Trans World International are shown here: Assume Trans World stock currently sells for $32 per share and a stock dividend of 10 percent is declared. Now assume that instead Trans World declares a stock dividend of 14 p..
Reliable Gearing currently is all-equity-financed. It has 28,000 shares of equity outstanding, selling at $100 a share. The firm is considering a capital restructuring. The low-debt plan calls for a debt issue of $380,000 with the proceeds used to bu..
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $10 per share dividend 10 years from today ..
A 30-year maturity bond has a 6% coupon rate, paid annually. It sells today for $877.42. A 20-year maturity bond has a 5.5% coupon rate, also paid annually. It sells today for $889.5. A bond market analyst forecasts that in five years, 25-year maturi..
Hewett and Hefner, LLP is a regional public accounting firm with 34 offices throughout the south eastern United States. To provide employees with cost-effective continuing professional education, the company maintains an in-house education and traini..
Olympic Sports has two issues of debt outstanding. One is a 9% coupon bond with a face value of $32 million, a maturity of 15 years, and a yield to maturity of 10%. The coupons are paid annually. What is the before-tax cost of debt for Olympic? What ..
Extended Warranty. Ted just moved into an apartment, and it does not have a refrigerator. A refrigerator is worth $3 every day because Ted will eat out less. Ted has a discount rate of 28%. Refrigerators usually last 4 years. How much is Ted willing ..
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