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A stock index with a dividend yield of 2.2 per annum with continuous compounding is currently standing at 1200.6 and has a volatility of 20 per annum. The riskOfree interest rate is 3.5 per annum with continuous compounding. Use a fourOstep binomial tree to calculate the price of
(a) a six month long forward contract on the index, with delivery price of 1200. Calculate the theoretical value of the forward contract. Compare and comment.
(b) a European six- month CALL option with a strike of 1200. Calculate also the value of the option by using the BlackOScholes formula. Compare and comment.
(c) an American six- month CALL option with a strike of 1200. (d) a down and out barrier CALL option with a strike of 1200 and knockout barrier of 1150 maturing in 6 months. A downOandOout call option gives the holder the right to buy the underlying asset at the strike price on the expiration date so long as the price of that asset did not go below a pre-determined barrier during the option's lifetime. When the price of the underlying asset falls below the barrier, the option is "knockedOout" and no longer carries any value.
Determine the number of units of product K to be manufactured in May and compute the May cash outlay for purchases of raw material A.
Find the unknowns in Big Chuck's abbreviated cash budget and determine the outstanding loan balance as of September 30, after any repayments have been made.
Rimsa Savings is a savings institution that provided Carson Company with a mortgage for its office building. Rimsa recently offered to refinance the mortgage if Carson Company will change to a fixed-rate loan from an adjustable-rate loan.
explain how the ebit chart works inputs determining the outputs-the two lines on the chartand the indifference point in
If the Friendly National Bank experiences a required reserves deficit, what actions can it take to be in compliance with the existing required reserves ratio?
Wal-Mart company Financial analysis
The following data are displayed in the financial market: Spot price on Walmart stock = $59; Expiration of the futures contract = one year; Interest rate = 6 percent per year;
International Finance Problem
What methods of cost estimation rely primarily on historical data? Describe the problems an unwary user may encounter with the use of historical cost data.
What is SSP's net investment required in the FMC? Assume that both pieces of equipment are being depreciated to a zero salvage value?
Calculate the firms earnings per share (EPS) for each year, recognising that the number of shares issued has remained unchanged since the firm's inception. Comment on the EPS performance in view of your response to question 1a.
in 1895 the first u.s. open golf championship was held. the winners prize money was 150. in 2006 the winners check was
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