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Consider a stock with a risk adjusted distribution that has a drift of r=.05 and a =.35. The distribution of a random variable z is normal with mean zero and variance 1. The value of a stock is S_{t}= S_{0} e^{(r-\frac{\sigma ^{2}}{2})T +z\sigma \sqrt{T}} . Now assume that T=.20 and S_{0}=62. the value of K = 60. Now draw a random value of z and find and the payoff to the option. To find random values of z in excel use Nomsinv(RAND()). In Python you would need to use numpy. For each random stock price find the payoff to the option. Repeat this 400 times and find the average value of the stock. Then find the average payoff to the option. Discount this value to find a present value using r= .05 . So you should have the average value of the stock at maturity and the average payoff at maturity. Then find the Black Scholes value and compare. Then do it again for another group of 400 replications.
For each of these nonrecurring items, give an example and indicate (match with) the appropriate accounting treatment. Extraordinary item. Prior period adjustment. Change in accounting estimate. Shown net as a separate line item between net income an..
If the inventory costs $12 per unit and will be financed at the bank at a cost of 12 percent, what is the monthly financing cost and the total for the four months? (Use 1.0 percent as the monthly rate.)
Has there been any new legislation passed to encourage banks to lend? How about consumer protection legislation?
The data in Figure suggest an unemployment coefficient of approximately -1.0 in the Phillips curve; - What is inflation in 2023.
Eaton, Inc., wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $30 per share, but the book value per share is $8. Net income is currently $3 million. The new facility will cost $4..
Current ratio can be obtained solely from the balance sheet. Total profit margin, or just called total margin, can be obtained solely from the income statement. Average collection period is used to evaluate account receivable performance. A smaller n..
You are going to borrow $440,000 for a term (number of years) corresponding to your age at a 5.50% interest rate. Calculate the following: The monthly payment. The total out-of-pocket cash you will spend to completely pay off the loan
List the basic steps in static GAP analysis. What is the objective of each?
Design a portfolio composed solely of exchange traded options (any options of your choice). Please chose a few different companies for the portfolio. Discuss the potential returns and risks involved in this portfolio. Value each option (of your choic..
An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 8% annual coupon. Bond L matures in 19 years, while Bond S matures in 1 year. What will the value of the Bond S be if the going interest rate is 5%? Why does ..
Under the assumption that the firm’s present capital structure reflects the appropriate mix of capital sources for the firm,
Calculate patient revenue on accrual basis for the coming year. Subdivide revenue by program, and within each program subdivide it by type of payer.
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