What is the price of the put option

Assignment Help Financial Management
Reference no: EM131176517

A call option is currently selling for $2.80. It has a strike price of $55 and three months to maturity. What is the price of a put option with a $55 strike price and three months to maturity? The current stock price is $57, and the risk-free interest rate is 5 percent. What is the price of the put option?

Reference no: EM131176517

Questions Cloud

Value of subject property using overall capitalization rate : A comparable property sold for $5,000,000. The appraiser determined that the sale price included favorable financing from the seller worth $250,000. What is the indicated value of the subject property based on price per square foot? What is the indic..
What is the equivalent annual cost : WSU Inc. has various options for replacing a piece of manufacturing equipment. The present value of costs for option Ell is $84,000. Option Ell has a useful life of 5 years; annual operating costs were discounted at 9%. What is the equivalent annual ..
Find risk-neutral probabilities governing movement of stock : Assume KBC stock is currently at S = $100. After one period, the price will move to one of the following two values: [uS and dS], where [u = 1.2; d = 0.9]. A $1.00 investment in the risk-free asset using continuous compounding will return $1.10 at th..
Your goal is to retire with an accumulated value : Your goal is to retire with an accumulated value of $3,000,000 in twenty years. You are able to earn a nominal interest rate of 7.2% convertible monthly. (a) In you make monthly payments starting at the end of the first month that increase by $5 each..
What is the price of the put option : A call option is currently selling for $2.80. It has a strike price of $55 and three months to maturity. What is the price of a put option with a $55 strike price and three months to maturity? The current stock price is $57, and the risk-free interes..
About the PW Analysis : Your friend brings you the following business proposal to be partners in a fast-food joint he wants to open. He says that the shop will require an initial investment cost of 600,000 TL (you will rent the shop, not buy it), and it will generate monthl..
Two mutually exclusive design projects : The Matterhorn Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$90,000 –$58,000 1 39,900 11,800 2 50,000 37,500 3 30,000 31,500 Requirement 1: (a) If the required retu..
What rate of return do they expect to earn on the stock : Eastern Electric currently pays a dividend of about $1.76 per share and sells for $26 a share. If investors believe the growth rate of dividends is 5% per year, what rate of return do they expect to earn on the stock?
What is the expected rate of return on the stock : Steady As She Goes Inc. will pay a year-end dividend of $3.50 per share. Investors expect the dividend to grow at a rate of 6% indefinitely. If the stock currently sells for $35 per share, what is the expected rate of return on the stock?

Reviews

Write a Review

Financial Management Questions & Answers

  Construction equipment for grading with a purchase price

A general contractor is buying construction equipment for grading with a purchase price of $140,000. The salvage price after 5 years is $16,000. The expected monthly benefit is $3,400. The dealership offered him to buy additional equipment with a tot..

  Government-wide statement of net assets with component units

When combining fund statements into the government-wide statement of net assets with component units, if one of the units has a funds allocated to a special revenue fund in cash, will I combine the general fund cash and the special revenue fund cash ..

  What is the value of this periodic deposit

What is the value of this periodic deposit? Give a detailed explanation on your calculations and what is the sum of their present values? Give a detailed explanation on your calculations.

  Cash flow-indifferent in accepting project and rejecting

A project that provides annual cash flows of $16,300 for eight years costs $69,000 today. What is the NPV for the project if the required return is 7 percent? Accept Reject What is the NPV for the project if the required return is 19 percent?  NPV $ ..

  Target capital structure-cost of debt and cost of equity

A company has a target capital structure of 60% debt and 40% equity and the tax rate is 34%. If the cost of debt is 8%, and he cost of equity is 12%, what is WACC of the company at its target capital structure?

  The expected market rate of return

The risk-free rate is 3 percent. The expected market rate of return is 15 percent. You expect a stock with a beta of 1.3 to offer a rate of return of 12 percent. According to CAPM, what is the stock's alpha? The answer is -6.6. Please help me calcula..

  What does the amortization schedule look like

You have a loan of $25,000 and will repay the loan over 5 years at 8% interest. What is your loan payment? What does the amortization schedule look like?

  Which provides the higher after-tax yield

Which provides the higher after-tax yield: the dumonts 1% bank savings account or a federal and state tax-free money market fund yielding 0.25 percent ? the dumonts are in the 15 percent federal marginal tax bracke.

  An investment requires an initial outlay

An investment requires an initial outlay of $50,000, and is expected to generate cash flows of $13,000 a year for eight years. The required return is 11%. Determine the replacement chain NPV for this investment to compare it to a mutually exclusive a..

  What is the interest rate on the loan

Poor Dog, Inc. borrowed $135,000 from the bank today. They must repay this money over the next six years by making monthly payments of $2,215.10. What is the interest rate on the loan?

  What is the average amount of receivables

McDowell Industries sells on terms of 3/10, net 40. Total sales for the year are $779,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 54 days after their purchases. What is the average amount of ..

  Made a gain or loss as a result

You are the vice president of International Info change, headquartered in Chicago, Illinois. All shareholders of the firm live in the US. Earlier this month, you obtained a loan of 20 million Canadian dollars from a bank in Toronto to finance the con..

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