Call option on stock with an exercise price

Assignment Help Financial Management

Reference no: EM13938303

A call option on Jupiter Motors stock with an exercise price of $45 and one-year expiration is selling at $3. A put option on Jupiter stock with an exercise price of $45 and one-year expiration is selling at $2.5. If the risk-free rate is 10% and Jupiter pays no dividends, what should the stock price be?

Reference no: EM13938303

Questions Cloud

Identification of the problem : Explain the six steps for an effective decision makings a. Identification of the Problem b. Definition of the Problem

What is the total after-tax cash flow from this sale : Transportation-Is-Us INC. purchased a truck four years ago. At the time, the firm paid $400,000 for the truck, and started depreciating the truck using straight-line depreciation over a ten-year life. However, the company no longer has need of the tr..

What is debt ratio after the change in capital structure : Executive Cheese has issued debt with a market value of $200 million and has outstanding 30 million shares with a market price of $10 per share. It now announces that it intends to issue a further $120 million of debt and to use the proceeds to buy b..

How this changes in the minimum wage could possibly affect : The chancellor said employers would be forced to pay staff a minimum of £7.20 an hour from next April 2016, and raise wages by 6% a year on average to around £9 an hour by the end of the year 2020. How this changes in the minimum wage, could possibly..

Call option on stock with an exercise price : A call option on Jupiter Motors stock with an exercise price of $45 and one-year expiration is selling at $3. A put option on Jupiter stock with an exercise price of $45 and one-year expiration is selling at $2.5. If the risk-free rate is 10% and Jup..

Future value of single sum problem : You put $1,000 in an investment account today which will earn 7% over the next 20 years, what is the future value?

Valuation–convertible bond : You purchased one of Big Corp.’s 8%, 10-year convertible bonds at its $1,000 par value a year ago when the company’s common stock was selling for $20. Similar bonds without a conversion feature returned 12% at the time. What would your return have be..

How many cakes must be sold to earn a monthly profit : Calculate the break even point for a month in units. How many cakes must be sold to earn a monthly profit of $10,000?

Calculate the net present value and profitability index : Using a 4.4% discount rate, calculate the Net Present Value, Payback, Profitability Index and IRR for each of the investment projects below (note, the inflows are for each year). Assuming a budget of $2,000,000 what are your recommendations for the a..

User Account

All Pages