Three-month call options and three-month puts on stock

Assignment Help Financial Management
Reference no: EM131562452

It is possible to buy three-month call options and three-month puts on stock Q. Both options have an exercise price of $64 and both are worth $14.

If the interest rate is 6.15% a year, what is the stock price? (Hint: Use put–call parity.) (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Stock price            $

Reference no: EM131562452

Questions Cloud

Define the put option price : Suppose that puts are traded. What should a 26-week put with an exercise price of $112 sell for?
Solar electric system to reduce the amount of electricity : DJ is considering the purchase of a $20,000 solar electric system to reduce the amount of electricity he purchases from the grid.
Pay for put on stock with same maturity and exercise price : How much would you be willing to pay for a put on this stock with the same maturity and exercise price?
Conflicts between npv and irr on mutually exclusive projects : Conflicts between NPV and IRR on mutually exclusive projects can be due to the following reasons:
Three-month call options and three-month puts on stock : It is possible to buy three-month call options and three-month puts on stock Q. If the interest rate is 6.15% a year, what is the stock price?
What is the expected return on a portfolio : What is the expected return on a portfolio with 40% of its money in UPS and the balance in Wal-Mart?
Calculate the cost of common equity : Calculate the cost of common equity. Assume that the expected return on a market portfolio is 15%, the company's beta is 1.20 and the risk-free rate is 4%.
Order to produce the same effective interest rate as offered : What quoted rate does Thames have to offer in order to produce the same effective interest rate as offered by Piccadilly?
Compare nominal interest versus real interest rates : Compare nominal interest versus real interest rates using US Treasury rates on 10 year notes;

Reviews

Write a Review

Financial Management Questions & Answers

  Is developing an asset financing plan

Christensen & Assoc. Is developing an asset financing plan. Christensen has $500,000 In current assets, of which 15% are permanent, and $700,000 in fixed assets. The current long-term rate is 11%, and the current short-term rate is 8.5%. If Christens..

  Calculate the real exchange rate-expected exchange rate

Suppose that the ratio of the price levels of a typical consumption basket in the United States versus Switzerland is 1 to 1.5 and the currenct exchange rate is $0.62 per swiss franc. the one year interest rate is 2 percent in the united states and 4..

  High-liquidity plan the return

Optimal policy mix Assume that Atlas Sporting Goods, Inc., has $800,000 in assets. If it goes with a low-liquidity plan for the assets, it can earn a return of 15 percent, but with a high-liquidity plan the return will be 12 percent. If the firm goes..

  Finding the capital structure

Fama’s Llamas has a weighted average cost of capital of 10.2 percent. The company’s cost of equity is 14 percent, and its cost of debt is 8.2 percent. The tax rate is 35 percent. What is Fama’s debt–equity ratio?

  Sales grow before any new fixed assets are needed

Alter Bridge Mfg., Inc., is currently operating at only 94 percent of fixed asset capacity. Current sales are $500,000. How fast can sales grow before any new fixed assets are needed?

  Compute the annual percentage rate of interest on the loan

The bank also requires you to pay a 3 percent loan origination fee, which will reduce the effective amount the bank lends to you. Compute the annual percentage rate of interest on this loan.

  Importance of knowing a companys wacc and npv

Calculate GBATT's WACC - using the WACC and the above cash flows, calculate the NPV of each project and justify the importance of knowing a company's WACC and NPV.

  Investor be expected to pay per share five years into future

A stock is expected to pay $0.80 per share every year indefinitely. If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 6.4%, what price would an investor be expected to pay per shar..

  What must the beta of given stock be

Deriving a Stock's Beta : - If the risk-free rate is 5 percent and the market risk premium is 7 percent, what must the beta of this stock be?

  Your realized yield be over three-year holding period

Three years ago, Joe bought a 5-year, 10% coupon paid semiannually bond for $1000. Currently, with interest rates having risen sharply, the bond is selling for $800 and you decide to sell it off. If you had re-invested the semi-annual coupons as you ..

  Cash flows if the firms WACC

What is the IRR of a project with the following cash flows if the firm’s WACC is 14%? Year 0: -$18,000 Year 1: $5,000 Year 2: $7,500 Year 3: $8,400 Year 4: $2,100 A. 11.32% B. 12.11% C. 14.00% D. 15.49% E. 17.83%

  Globalization and the multinational enterprise

Globalization and the Multinational Enterprise (MNE). The term globalization has become widely used in recent years. How would you define it?

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