What is the value of a call option on the stock

Assignment Help Financial Management
Reference no: EM13934857

A stock is currently priced at $64 and has an annual standard deviation of 44 percent. The dividend yield of the stock is 3.1 percent, and the risk-free rate is 6.1 percent. What is the value of a call option on the stock with a strike price of $61 and 47 days to expiration?

Reference no: EM13934857

Questions Cloud

Why is insider trading considered both illegal and unethical : Why is insider trading considered both illegal and unethical?
Calculate net income treating the amount : Calculate net income treating the amount of over applied overhead as immaterial and assigning it to Cost of Goods Sold.
Consistent with options characteristics : Which of the following statements is not consistent with options characteristics?
Design a relational database to store information : Create the following queries, including at least the indicated fields:
What is the value of a call option on the stock : A stock is currently priced at $64 and has an annual standard deviation of 44 percent. The dividend yield of the stock is 3.1 percent, and the risk-free rate is 6.1 percent. What is the value of a call option on the stock with a strike price of $61 a..
Explain the importance of continuing education : Create a 10- to 12-slide Microsoft PowerPoint presentation that addresses the following: Explain the importance of continuing education. Using the company selected in Week One, describe the support it provides its employees for continuing education
Elaborate on the determinants of beta : Explicate beta. That is, define it and discuss the three different cases. Elaborate on the determinants of beta. Explicate the concept of risk in Finance. How is value affected by risk? Does anything else affects value? Explain. Talk on opportunity c..
What characterizes a deficiency in zinc : inc is a metallic element which exists in micro-quantaties in the human body. However, deficiencies in zinc have been linked to a host of different diseases. What characterizes a deficiency in zinc?
Average collection period and average payment period : You know the following. ATO, ITO and FATO are 2, 6, and 2.5 respectively while for the industry they are 4.4, 19 and 4 respectively. The current ratio and quick ratio are 1 and 1.5 for the firm and 2.3 and 2.0 for the industry respectively. The avera..

Reviews

Write a Review

Financial Management Questions & Answers

  Determine the payback period-npv and irr for both project

Determine the Payback period, NPV and IRR for both project A and B (show work). Which Project would you select and why? Be specific. Project A will require an initial investment of $ 200,000 and Project B will require and initial investment of $ 325,..

  Present and future values and security valuation

We examined two important topics in finance this week: (a) present and future values and (b) security valuation. Critically reflect on the importance of present and future values. What factors must be considered when calculating present and future va..

  Present value of the remaining lease payments

ZXC has 20 annual lease payments remaining in its contract. The next one for $2.5m is due in 4 months. The payments decrease with the equipment value by 4% per year. Using a 12% discount rate, what is today’s present value of the remaining lease paym..

  Define and discuss the determinants of growth

Define and discuss the determinants of growth. What is the basic idea of the percentage of sales approach?

  Constant growth rate-g

A stock is trading at $40 per share. The stock is expected to have a year-end dividend of $2 per share (D1 = $2), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 14%

  Evaluate the importance of financing and technology

Summarize key milestones involved in the past and present shaping and transitional dynamics behind changes in the present health care industry.

  Use of a machine for production purposes in his business

A commercial client is seeking use of a machine for production purposes in his business. Suggest which products might be useful to them, and how they are consistent with the aims of Islamic banking?

  What are the three primary parts of the efficiency ratio

Describe why the efficiency ratio is a meaningful measure of cost control. Describe why it may not accurately measure cost control. What are the three primary parts of the efficiency ratio? Are there any trade offs among these three components? Expla..

  What are differences between accounting profit and cash flow

The Flying Lion Corporation reported the following data on the income statement of one of its divisions. Flying Lion Corporation has other profitable divisions. 20X2 20X1 Net sales $800,000 $500,000 Cost of goods sold 560,000 320,000 Operating expens..

  What is implied annual interest rate on futures contract

What is the present value of the Coca-Cola futures contract? If the contract settles at 105-8, are current market interest rates higher or lower than the standardized rate on a futures contract? Explain. What is the implied annual interest rate on th..

  What is the profit margin for the smart car

Honda is considering bringing its new Honda NBox it makes for the Japanese market to the United States. Its closest competitor would be Daimler’s Smart car, which made a profit of $108.3 million on sales of $10.7 billion in the United States last yea..

  Describe the strengths and weaknesses of expense reduction

Describe the strengths and weaknesses of expense reduction, revenue enhancement, and contribution growth strategies.

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