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a) Calculate the price of a European style call option with 6 months left to maturity assuming a risk-free rate of 3.5% and a non-dividend paying stock which can change in price by a factor of 1.1 or 0.9 every 3 months. The current price of the underlying asset is $44 and the option strike price is $42.50
b) Re-calculate the price of the option in part a assuming that for the second three month period, the price change factors are 1.2 and 0.85.
c) Calculate the price of an American style put option with one year to maturity assuming a risk-free rate of 2.8% and a non-dividend paying stocks which can change in price by a factor of 1.10 or 0.95 every 6 months. The current price of the underlying asset is $16 and the option strike price is $17.50.
An investment under consideration has a payback of seven years and a cost of $320,000. If the required return is 12 percent, What is the worst-case NPV? Explain...
differentiate between aloocative effiency and pricing effiency
YOU ARE A CEO OF A SOFTWARE COMPANY WHICH HAS LIMITED ACCESS TO DEBT EQUITY MARKETS. YOUR FIRMS AVERAGE RETURN ON LAST YEAR PROJECTS IS 28% AND COST OF CAPITAL IS 12 %.Would Npv or
DIFFERENTIATE BETWEEN ALLOCATIVE EFFICIENCY AND PRICING EFFICIENCY
The first part requires you to prepare a basic master budget. The general description is provided in Part A, in this document. However the data for the assignment is to be obtained
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Chang and Fyffe (1971) assume that a ?rm has a ''long-run sales history of individual seasonal-style-goods SKUs or groups of such SKUs''. They propose to estimate demand by using r
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