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Consider an option on a non-dividend-paying stock when the stock price is $107, the exercise price is $102, the risk-free interest rate is 5% per annum, the volatility is 25% per annum, and the time to maturity is four months.
a) What is the price of the option if it is a European call?
b) What is the price of the option if it is an American call?
c) What is the price of the option if it is a European put?
d) Verify that put–call parity holds.
An investment pays $2,100 per year for the first 3 years, $4,200 per year for the next 8 years, and $6,300 per year the following 12 years (all payments are at the end of each year). If the discount rate is 8.75% compounding quarterly, what is the fa..
What investment accumulates more interest--15% compounded semi annually, or 14% compounded daily?
A stock has a correlation with the market of 0.64. The standard deviation of the market is 30%, and the standard deviation of the stock is 38%. What is the stock's beta?
Please make your initial post by midweek, and respond to at least one other student's post by the end of the week. Please check the Course Calendar for specific due dates.
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What does the acronym CAMELS refer to in commercial bank examinations? What are the most important facets of an examination?
A firm has a market value equal to its book value. Currently, the firm has excess cash of $800 and other assets of $5,200. Equity is worth $6,000. The firm has 600 shares of stock outstanding and net income of $700. The firm has decided to spend all ..
Jumpin-JehoSaphats is owned by Jessica Jean (JJ) Saphats. Jessica wants to incorporate her business but is not sure of the differences between the current form of sole proprietorship and changing to a corporation. She has come to you to discuss the..
Assume you invest $25,000 into an account with an 11% APR. Interest is compounded monthly. How much will you have in 25 years? How much more is this amount than if you compounded interest yearly? But this time continuously compound the interest?
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