What is the current value of this floorlet

Assignment Help Financial Management
Reference no: EM131347152

You are given the following short-term interest rates in a Black-Derman-Toy binomial tree: r0 = 0.05, rd = 0.04, ru = 0.09, rdd = 0.06, ruu = 0.18, rddd = 0.04, ruud = 0.16. A year-4 floorlet has a strike rate of 0.07. The floorlet has a notional amount of $100. What is the current value of this floorlet?

Reference no: EM131347152

Questions Cloud

Determine the equation for natural frequencies : Mechanical Vibrations 33312 - Determine the damping coefficient  μ,where the damping force on the plate is Fd = 2μAv, 2A is the total surface area of the plate, and v is its velocity.
Applicable tax law regarding employee compensation : As part of his contract at his new job, Jim is provided a company car and gas card to go back and forth to work. He sometimes uses the car for out-of-town travel approximately once a month. Explain the applicable tax law regarding employee compensati..
The annual continuously compounded yield : A stock is currently selling for $100. The annual continuously compounded yield is 0.03. The annual continuously compounded risk-free interest rate is 0.11, and the stock price volatility is 0.30. Consider a $102-strike put with one year to expiratio..
Determine the adiabatic flame temperature of acetylene : Determine the adiabatic flame temperature of acetylene (C2H2) burned in a steady flow process with (a) 100.% theoretical air, (b) 200.% theoretical air, and (c) 400.% theoretical air.
What is the current value of this floorlet : You are given the following short-term interest rates in a Black-Derman-Toy binomial tree: r0 = 0.05, rd = 0.04, ru = 0.09, rdd = 0.06, ruu = 0.18, rddd = 0.04, ruud = 0.16. A year-4 floorlet has a strike rate of 0.07. The floorlet has a notional amo..
Determine the adiabatic flame temperature of propane : Determine the adiabatic flame temperature of propane (C3H6) burned in a steady flow process with (a) 0.00% excess air, (b) 100.% excess air, and (c) 300.% excess air.
What is the current value of this caplet : You are given the following short-term interest rates in a Black-Derman-Toy binomial tree: r0 = 0.04, rd = 0.02, ru = 0.12, rdd = 0.047, rdu = 0.072. A year-3 caplet has a strike rate of 0.07. The caplet has a notional amount of $100. What is the cur..
Discuss the various considerations to be made : Printers are an important peripheral device that allow us to turn digital content into hard copy documents. Discuss the various considerations to be made between home and office print solutions.
Determine the adiabatic flame temperature : Determine the adiabatic flame temperature and maximum explosion pressure as 0.001 kgmole of butane (C4H10) is burned in 100.% theoretical air in a 0.100 m3 adiabatic bomb calorimeter.

Reviews

Write a Review

Financial Management Questions & Answers

  Calculating returns-what was the dividend yield

Calculating Returns. Suppose a stock had an initial price of $83 per share, paid a dividend of $1.40 per share during the year, and had an ending share price of $96. Compute the percentage total return. What was the dividend yield? The capital gains ..

  Treasury bond-what is the equilibrium rate of return

The real risk-free rate is 3.05%, inflation is expected to be 2.60% this year, and the maturity risk premium is zero. Ignoring any cross-product terms, what is the equilibrium rate of return on a 1-year Treasury bond?

  Risk free asset and the market portfolio

Given that the risk-free rate is 5%, the expected return on the market portfolio is 20%, and the standard deviation of returns to the market portfolio is 20%, answer the following questions: a. You have $100,000 to invest. How should you allocate you..

  Normal distribution-plots more than three standard deviation

Given a normal distribution, assume you want to earn a rate of return that plots more than three standard deviations above the mean. What is your probability of earning such a return in any one year?

  Six month call options with strike price and cost

Six month call options with strike price of $45 and $50 cost $7 and $4, respectively. What is the maximum gain when a bull spread is created from the calls? What is maximum loss when a bull spread is created from the calls? What is the maximum gain w..

  How would you define money illusion

How would you define, “money illusion?” Do you believe regardless of which theory is applicable, interest rates will continue to vary based on a person’s credit, amount of fixed debt, and debt-to-income ratio? Please explain. In our economy today do ..

  Calculate the metrics of capital budgeting

Identify relevant incremental cash flows - Calculate cost of capital (k-wacc) to use as the discount rate and calculate the metrics of capital budgeting: Net Present Value, Profitability Index,

  Discarded at end of project resulting in after tax cashflow

The firm is evaluating a project that will add revenues of $325,000 annually for 5 years. The project has $225,000 of annual operating costs (including depreciation). The necessary equipment costs $350,000 and has a five-year life with straight line ..

  Due to the bond convertible feature

A convertible bond has a 7.30 percent, semi-annual coupon and a conversion rate of $31.25. The bond has a face value of $1,000 and matures in 11.5 years. The current yield to maturity for bonds of similiar risk is 6.2 percent, but due to the bond's c..

  Cost of equity capital-arithmetic and geometric growth rate

Suppose Powers Ltd. just issued a dividend of $2.49 per share on its common stock. The company paid dividends of $1.99, $2.06, $2.23, and $2.33 per share in the last four years. Required: If the stock currently sells for $68, what is your best estima..

  Considering a change in its cash only sales policy

Devour, Inc., is considering a change in its cash only sales policy. The new terms of sale would be net one month. The required return is 0.88 percent per month. Current Policy New Policy Price per unit $ 1,020 $ 1,020 Cost per unit $ 830 $ 830 Unit ..

  What is the book value of the machine

Troy Industries purchased a new machine 5 year(s) ago for $84,000. It is being depreciated under MACRS with a 5-year recovery period using the schedule. What is the book value of the machine?

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