What is the value of a six-month european put option

Assignment Help Finance Basics
Reference no: EM132200131

Patterson Inc. is currently selling its shares at $45, and a six-month European call option on those shares, with a $45 strike price, is selling at $1.50. If the risk free rate is 5 percent, what is the value of a six-month European put option on the same stock with $45 strike price? Choose the closest alternative.

A) $0.64

B) $0.40

C) $0.91

D) $0.14

Please specify your answer. Highly appreciate!

Reference no: EM132200131

Questions Cloud

Draw the consumption possibility frontier for fictionia : Draw the consumption possibility frontier (CPF) for Fictionia, showing the combinations of shirts (S) and bread (B) that can be feasibly consumed in a day.
What rate would you expect to see on a treasury bill : What rate would you expect to see on a Treasury bill? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g.,
10-year macrs category : An asset fitting into the 10-year MACRS category was purchased 2 years ago for $130,000. The book value of this asset is now
Calculate the coefficient of variation for the stock : The variance of the returns of stock X is 62.5% and the expected return from the stock is 18%. Calculate the coefficient of variation for the stock.
What is the value of a six-month european put option : If the risk free rate is 5 percent, what is the value of a six-month European put option on the same stock with $45 strike price? Choose the closest alternative
Current financial issues-inflation-alternative currencies : How does Gresham’s Law apply to many of current financial issues—inflation, alternative currencies, country bankruptcies, etc. Why?
What was the market risk premium : What was the market risk premium during these ten years?
Develop a five year strategic financial plan : Why is it important for a healthcare organization to develop a five year strategic financial plan, not just an annual budget?
What would the price be the recapitalization : Assuming that the shares can be repurchased at the price that existed prior to the recapitalization, what would the price be following the recapitalization?

Reviews

Write a Review

Finance Basics Questions & Answers

  At what price should the annual payment bond sell

Neither bond is callable. At what price should the annual payment bond sell?

  Determination of profit

Laurn has a margin account and deposited $50,000. Assume the prevailing margin requirement is 40%, suppose commissions are ignored, and Gentry Shoe Corporation is selling at $35 per share.

  What impact would the following actions have on the

what impact would the following actions have on the operating and cash conversion cycles? would the cycles increase

  Lumber liquidators laminate flooring

If you were a consumer who has installed Lumber Liquidators Laminate flooring in your home or business, what would you do now?

  What sum of money should be invested today

What sum of money should be invested today so that 5 annual payments of $1,000 commencing in 3 years can be paid? Use j1 = 6%.

  Using the maximum ratios for a conventional mortgage how

using the maximum ratios for a conventional mortgage how big a monthly payment could the tayler family afford if their

  What is the ocf for this project

If the tax rate is 31 percent, what is the OCF for this project?

  Ebenezer scrooge has invested 60 of his money in share a

ebenezer scrooge has invested 60 of his money in share a and the remainder 40 in share b. he assesses their prospects

  What is the effective interest cost of this loan

Set up the amortization schedule for a 5-year, $1 million, 9 percent term loan that requires equal annual end-of-year payments. Be sure to distinguish between the interest and the principal portion of each payment. What is the effective interest cost..

  What is the accounting break-even level

A financial calculator costs $10 per unit to manufacture and can be sold for $30 per unit. If the plant lasts for 4 years and the cost of capital is 20%, what is the accounting break-even level?

  Million after a recapitalization

Lee Manufacturing's value of operations is equal to $850 million after a recapitalization (the firm had no debt before the recap).

  Calculate the present value of this investment

Your banker visits you and tells you of an investment that pays you $150 at the beginning of every 3 months for the next 3 years and $2,000 at the end of 3 years. Suppose the current interest rate is 2% p.a. compounded quarterly. Apply the princip..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd