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A stock price is $103 per share, exercise price of the options is $100 per share, all options are European and the stock does not pay any dividend. Option contracts are written on 100 shares of stock and mature in 6 months. The call price is $9 per share and the put price is $4 per share.
1. Use the put and call options and the underlying stock to create a portfolio which will let you borrow $10,000 (face amount) for 6 months through the financial markets.
2. What is the rate of interest on the money that you borrow in 1) Give this rate per annum with continuous compounding.
Halliford Corporation expects to have earnings this coming year of $3/share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 50% of its earnings. It will retain 20% of its..
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After an injury, you win a lawsuit judgment of $3,524 per month starting next month for a total of 42 months. If the interest rate is 9.1% APR compounded monthly, what is the current equivalent lump sum of your settlement?
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You have been living in the house you bought 6 years ago for $250,000. At that time, you took out a loan for 80% of the house at a fixed rate 25-year loan at an annual stated rate of 9.5%. You have just paid off the 72th monthly payment. Interest rat..
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You make a one-time deposit of $1,000 into an account (Account A) which pays out 8% effective annual interest at the end of each year. Each year, you take the interest payout and deposit it into an account (Account B) earning an effective annual inte..
You are planning to save for retirement over the next 35 years. To do this, you will invest $740 a month in a stock account and $340 a month in a bond account. The return of the stock account is expected to be 9.4 percent, and the bond account will p..
Travis invested $9,250 in an account that pays 6 percent simple interest. How much more could he have earned over a 7-year period if the interest had compounded annually?
What equal series of payments must be paid into a sinking fund in order to accumulate each given amount?
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