Consider european put option

Assignment Help Financial Management
Reference no: EM131347629

Consider a European put option with K=$50, T=1 year, 4= 30%, and r=1%. Plot the price of the put option as a function of S(0) between 0 and $75. On the same graph also include a plot of (K-s)+.

Reference no: EM131347629

Questions Cloud

Single-stock futures contract on non-dividend-paying stock : A single-stock futures contract on a non-dividend-paying stock with current price $150 has a maturity of 1 year. If the T-bill rate is 3%, what should the futures price be? What should the futures price be if the maturity of the contract is 3 years?
Plowback ratio-what is the firm peg ratio : A firm has a stock price of 54.75 per share. The firm's earnings are 75 million and the firm has 20 million shares outstanding. The firm has an ROE of 15% and a plowback ratio (retained earnings ratio) of 65%. What is the firm's PEG ratio?
What is the optimal exercise boundary : Consider a perpetual American put option with K = $50, 4 = 30%, and r = 1%. Suppose that today the price of the stock is $50, what is the optimal exercise boundary b? Suppose that today the price of the stock is $60, what is the optimal exercise boun..
Consider european digital put option : Consider a European digital put option that pays $1 if S(T) ≤ K and $0 otherwise. How much does this option cost? To find this, consider a portfolio that is long a digital put and long a digital call option. How much does this portfolio payoff at tim..
Consider european put option : Consider a European put option with K=$50, T=1 year, 4= 30%, and r=1%. Plot the price of the put option as a function of S(0) between 0 and $75. On the same graph also include a plot of (K-s)+.
Monthly mortgage payment at the end of second month : You are borrowing $200,000 on a 30 year, 12% apr, monthly payment, mortgage loan. How much will be your principal repayment from your monthly mortgage payment at the end of the second month?
The net present value and internal internal rate of return : Use the Net Present Value (NPV), Internal Internal Rate of Return (IRR), and Payback period model to explain the company’s (Amazon) project performances for last 3 years.
Qualifying stock redemption for tax purposes : Assume in Problem 34 that Julio has a capital loss carryover of $ 50,000 in the current tax year. Julio has no other capital gain transactions during the year. What amount of the capital loss may Julio deduct in the current year in the following situ..
The asset can sell for book value at the end of the project : A project requires an initial investment of $200,000 and expects to produce a cash flow before taxes of 120,000 per year for two years (i.e., cash flows will occur at t = 1 and t = 2).  Assume that the asset can sell for book value at the end of the ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the current yield for bond

Bond P is a premium bond with a coupon rate of 8.4 percent. Bond D is a discount bond with a coupon rate of 4.4 percent. Both bonds make annual payments, have a YTM of 6.4 percent, and have nine years to maturity. What is the current yield for bond P..

  Most important aspects of the home sale data

For this practical application exercise, assuming the role of a real estate agent living and working in southern Florida. The senior real estate partner of the firm e-mails a document containing Florida pool home data and asks you to find ways to des..

  What is the nominal rate of return on these bonds

The outstanding bonds of Roy Thomas inc provide a real rate of return of 3.5%.the current rate of inflation is 2.1 %. What is the nominal rate of return on these bonds?

  Company also has two bond issues outstanding

Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $73, and the book value per share is $8. The company also has two bond issues outstanding. Suppose the most recent dividend was $4.50 and the dividend growth ..

  Machine including all costs initial-operating

The company is choosing between machine A and B (they are mutually exclusive and the company can only pick one). The initial cost of machine A is $500,000 and it will last for 7 years before it needs to be replaced.  Calculate the 7 year and 5 year a..

  Planning on investing in a mutual fund

Kate Eden received a graduation present of $2,000 that she is planning on investing in a mutual fund that earns 8.5 percent each year. How much money can she collect in 3 years? Your bank pays 5 percent interest semiannually on your savings account. ..

  Analyze various aspect of finance that management understand

Explain various aspect of finance that management must understand. Describe why manager needs to understand the characteristics and importance of financial markets including their liquidity, competitiveness, and efficiency.

  Lower production costs and increase productivity

Briefly explain how a company can achieve lower production costs and increase productivity by improving the quality of its products or services.

  Compute the companys economic value added

Bon Temps’ financial statements show the following information: Average cost of funds 10.0 % EBIT $ 500,000 Total capital $1,250,000 EPS $2.00 Shares outstanding 150,000 Marginal tax rate 30.0% (1) Compute the company’s economic value added (EVA) (2)..

  Profitability index is greater than the net present value

A project would be acceptable if: A. The net present value is positive. B. The payback is greater than the discounted equivalent annual annuity. c. The equivalent annual annuity is greater than or equal to the firm’s discount rate. d. The profitabili..

  What is the process followed by the bond price

What is the process followed by the bond price?  - What is the expected instantaneous return to the holder of the bond?

  Calculate ecos current after-tax cost of long term debt

Since its inception, Eco Plastics Company has been revolutionizing plastic and trying to do its part to save the environment. Eco's founder, Marion Cosby, developed a biodegradable plastic that her company is marketing to manufacturing companies thro..

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