Derive the forward price of the stock for delivery

Assignment Help Accounting Basics

Reference no: EM131321442

ABC stock has a share price of $150 today. All rates of interest are 3% per annum on a continuously compounded basis. A one-year European call option on one share of stock struck at $147 is worth $15. Finally, ABC is scheduled to pay the following dividends per share over the next year: a dividend of $3.0 per share in three months and a dividend of $3.0 per share in nine months.

a) Derive the forward price of the stock for delivery in one year.

b) What is the value of an otherwise identical European put option?

Reference no: EM131321442

Questions Cloud

What is the beta of portfolio : You own $18,876 of Olympic Steel stock that has a beta of 3.10. You also own $16,940 of Rent-a-Center (beta = 1.52) and $12,584 of Lincoln Educational (beta = 0.90). What is the beta of your portfolio?

Expansion project-require initial fixed asset investment : H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,460,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wor..

Describe all constructors of the savings account class : Can you convert a superclass reference into a subclass reference? A subclass reference into a superclass reference? If so, give examples. If not, explain why not.

Give a succinct overview of your fictitious company : Imagine you work for a company that has recently merged with an overseas company. Write a brief introduction to your company as well as the company that was purchased. Then develop an eight to ten (8-10) point checklist detailing what steps you wo..

Derive the forward price of the stock for delivery : Derive the forward price of the stock for delivery in one year - What is the value of an otherwise identical European put option?

How important is hci for nontechnical individuals : How important is HCI for nontechnical individuals? Identify an app on your phone or a piece of software on your computer, describe it, and explain its current basic HCI for users.

Banking and money lending help to stimulate economic growth : Do you feel that the financial markets play any role in financing, instigating or creating wars among nations in the modern world? How do the concepts of credit and interest, as incorporated into banking and money lending, help to stimulate economic ..

Derive an upper bound on the value of a put option : Derive the forward price of the stock for delivery in one year - what is the value of an otherwise identical European put option?

Rewrite returns expression in which cond has been replaced : Write the function rewrite (x), x is an s-expr. If x is not a "legal" cond, rewrite returns nil. Otherwise, rewrite returns an expression in which each cond has been replaced by an equivalent sequence of nested if- then.

User Account

All Pages