Suppose ABCD's stock price is currently $50. In the next six months it will either fall to $40 or rise to $60. What is the current value of a six-month call option with an exercise price of $50?

a. $5.39
b. $15.00
c. $8.25
d. $8.09

Answers

Answer 1

Answer:

A. $5.39

Explanation:

The interest rate has been given as 2%

First we get the call option pay off.

The Call option payoff is calculated as $60-$50

This gives us $10 and 0

We will get two equations

60x+1.02y=10 -----1

II) 40x+1.02y=0----2

We proceed to solve for both x and y in this equations using the simultaneous linear equation

Then we get x=0.5 (which is option delta)and the valifor y, y= -19.6

Then the call option price would be

=0.5x50-19.61

= 25-19.61

= $5.39

Therefore option a is the answer


Related Questions

One of the world's most-recognizable franchisers is McDonald's. Advantages of franchising in global markets include:_______

a. the lack of any long-term commitments in the business arrangement.
b. a guarantee of a specific level of quality.
c. tight control needed to realize experience curve or location economies.
d. forgoing the development costs and risks associated with opening up a foreign market.

Answers

Answer:

d. forgoing the development costs and risks associated with opening up a foreign market.

Explanation:

Franchise is a license consisting of a contractual arrangement between a parent company and another, that allows individuals or an organization access to its knowledge, processes, trademarks in order to provide a service.

One of the world's most-recognizable franchisers is McDonald's. Advantages of franchising in global markets include forgoing the development costs and risks associated with opening up a foreign market.

This ultimately implies that, franchisers such as McDonald do not require additional capital and development expenses to have their businesses being situated in a foreign market or country, as they only required to issue licenses to franchisors who are interested in being part of their business by paying a fee.

To attend a selective college, how many years of high school math must you complete? A. 2 B. 6 C. 3 D5​

Answers

It all depends on what college, and plenty of other things you should probably ask the college you are trying or going to attend.

So I am unsure.

Answer:

isnt it 4 but there is no 4 i would say c.3

Explanation:

Discuss whether or not demand for laser eye surgery will become more inelastic over time

Answers

Price elasticity of demand is referred to as the tool that measures the sensitivity of the quantity demanded and the price of the products and services. The moment when the price rises the quantity demanded falls and vice-versa happens in the other moment.

The demand for laser eye surgery will be more demanded or demand will be inelastic because as we advance in technology more people will start to use these new electronics so many people with get their eyesight ruined by the constant blue light their eyes are receiving which will lead to people getting laser eye surgery to fix their damaged eyes.

To know more about the inelastic demand for laser eye surgery, refer to the link below:

https://brainly.com/question/13450393

Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is:______

Answers

1-¿Dónde se desarrolla la acción? ( País, zona urbana o rural)

Vancouver, Columbia Británica en minessota

2-¿ Por qué se llama así la protagonista?

3-¿Con quién convive? ¿ a qué se dedica?

Con su padre y su madrastra

4-¿ Qué mueble aparece al principio, el cual tiene su importancia en la

trama?

5-¿ Qué es lo primero que piensa hacer la protagonista cuando se entera

de que está embarazada? ¿ por qué se echa para atrás?

6-¿Dónde busca a la pareja para adoptar a su hijo?

7- Cuando está en casa de la pareja, la abogada le habla de

“compensaciones” ¿ a qué crees que se refiere?

8-¿Qué es la maternidad subrogada? ¿es legal en España? ¿ y en Estados

Unidos? Infórmate al respecto. ¿ qué famosos españoles están ahora en

juicio por un caso de paternidad subrogada?

9-¿Cómo es la relación de Juno con el marido de la futura madre de su

hijo? ¿Qué personalidad tiene este personaje ( el marido)? ¿ qué acaba

haciendo?

10- ¿Qué te parece el personaje del chico que deja embarazada a Juno?

¿Cómo acaba su relación con él? ¿ Qué crees que harías en una situación

parecida?

If the amount of factory overhead cost incurred exceeds the amount applied, the factory overhead account will have a:______

a. debit balance and be overapplied
b. credit balance and be underapplied
c. credit balance and be overapplied
d. debit balance and be underapplied

Answers

Answer: D

Explanation:

What did Brian do in Three Signs of a Miserable Job to help his employees understand how they would be measured?

Answers

Answer: Observed the employees, found out they saw their work irrelevant and observed the staff suffered from anonymity

Explanation:

Brain showed three(3) signs;

- He observed his employees who found it difficult measuring their own performance.

- He discovered that employees saw their work irrelevant, and made them not to place value on it

- He observed that the staff suffered from not being acknowledged, and no one was interested in the employees as individuals.

In addition, he tasked each employee to notify who they served and who would find their work relevant when they do it.

If the marginal product of labor is always positive, the total revenue will grow with each additional worker. Firms do not continuously hire new workers because: ________

Answers

Answer:

A sound firm hires input(workers) in as much as marginal benefit from it is greater than marginal cost of it. The hiring is done till both become equal(MB=MC). Since Marginal Product Labor is always positive, total revenue will rise.

However, Firms do not continuously hire new workers because of the reason below:

a. Marginal cost exists and is positive. When value of marginal product of labor becomes less than marginal cost (Wage), it is not profitable to hire more labor. This is loss making.

b. Hiring is done till VMPL > Wage.

What type of security can be used to minimize both the risks for an investor with a fixed investment horizon? Explain.

Answers

Answer:

Zero coupon Treasury bond with a duration equal to the investors investment horizon.

Explanation:

Zero coupon Treasury bond is also called Treasury Zero and the face value of the bond is paid on maturity.

They do not pay interest periodically or coupon payment. Thus the name zero coupon.

This is in contrast to other bond types that make periodic payment of interest and then recieved face value at maturity.

Zero coupon Treasury bond minimises risk for the investor because the government always pays it's obligations.

The agreed value at maturity is not subject to market forces and other economic factors.

In this scenario when the zero coupon treasury bond has the same duration as investor investment horizon it minimises his risk compared to other bond types

what is profit or loss revaluation?​

Answers

Revaluation is used to adjust the book value of a fixed asset to its current market value. ... If a revaluation results in a decrease in the carrying amount of a fixed asset, recognize the decrease in profit or loss

Answer:

Revaluation

Used to adjust the book value of a fixed asset to its current market value. If a revaluation results in a decrease in the carrying amount of a fixed asset, recognize the decrease in profit or loss.

____ leadership is the ability to anticipate, envision, maintain flexibility and think strategically and work with others to initiate changes that will create a positive future for an organization.
1 Strategic
2 Charismatic
3 Visionary
4 None of the above

Answers

Using context clues it is very obviously 1. Strategic
the right answer is 1, strategic :)

Which of the following is the best example of a good?
Question 17 options:

1) the physical examination you received from your doctor

2) the birthday candles you purchased to go on your sister's birthday cake

3) the airplane flight you took to attend a funeral

4) the driving lessons you took

5) the life guarding class you took last summer

Answers

Answer:

option 2

Explanation:

The best example of the good is the birthday candles that should be bought for the birthday cake of your sister.

The information related to the good is as follows:

A good is an item that should be purchased from the company or an individual based on the needs or wants of the consumer. It can be intangible & tangible.It involved the goods that have any existence like birthday candles, etc.

Therefore the other options are incorrect.

So we can conclude that The best example of the good is the birthday candles that should be bought for the birthday cake of your sister.

Learn more about the good here: brainly.com/question/22536410

The valuation of the cat food business is based on cash flows of $180,500 per year over a five year period. The target business has the same risk as the firm’s overall operations. The cost of equity is 15 percent and the cost of debt is 3 percent on an after-tax basis. The firm’s capital structure consists of 10 million in equity and 8 million in debt.

What is the most the pet-food manufacturer should pay for acquiring the cat food business per its required return (WACC)?

Answers

Answer: $690,044

Explanation:

First calculate WACC.

Total capital = 10 + 8 = $18 million

WACC = (Weight of debt * after-tax cost of debt) + (weight of equity * cost of equity)

= (8/18 * 3%) + (10/18 * 15%)

= 9.67%

Using the WACC, find the present value of the cashflows for the next 5 years. This will be an annuity.

= 180,500 * (1 - (1 + r) ^-n)/r

= 180,500 * ( 1 - ( 1 + 9.67%) ^ -5)/9.67%

= $690,044.67

= $690,044

They should pay no more than this present value.

Females, it is said, make 70 cents to the dollar in the United States. To investigate this phenomenon, you collect data on weekly earnings from 1,744 individuals, 850 females and 894 males. Next, you calculate their average weekly earnings and find that the females in your sample earned $346.98, while the males made $517.70.

Required:
Calculate the female earnings in percent of the male earnings. How would you test whether or not this difference is statistically significant?

Answers

Answer:

67%

Test for 2 Independent means

Explanation:

Given that:

Average Female earning per week in sample = $346.98

Average Male earning per week in sample = $517.70

Female earning in percent of male earning :

(Female earning / male earning) × 100%

(346.98 / 517.70) * 100%

0.6702337 * 100%

67.02%

= 67%

Testing whether or not the difference in weekly earning by males and female can be conducted by testing the difference in sample means of both males and females by taking the two different samples as being independent.

Usually :

Null hypothesis : H0 : m1 - m2 = 0

Alternative hypothesis : H1 : m1 - m2 ≠ 0

The shape of a melody allows the piece to begin on the same note. What is this shape called?

A. the pitch

B. the contour

C. the climax

D. the step



subject: music not business

Answers

A
..................

Differences between financial statement and taxable income were as follows:

$ in million
Pretax accounting income $300
Permanent difference (24)
276
Temporary difference 18
Taxable income $258

The cumulative temporary difference as of the end of 2021 is $104 million (also the future taxable amount). The enacted tax rate is 25%. What is the deferred tax asset or liability to be reported in the balance sheet?

Answers

Answer:

Deferred tax liability = $26,000,000

Explanation:

The deferred tax liability is calculated at the tax rate of 40% on the future taxable income:

Deferred tax liability = $104,000,000*25%

Deferred tax liability = $26,000,000

Thus, $260,00,000 is the deferred tax asset or liability amount to be reported in the balance sheet as current or long term.

Ariel Tax Planning Service has the following plant​ assets: Communications​ equipment: Cost, with useful life of 8​ years; Furniture:​ Cost, with useful life of 12​ years; and​ Computer: Cost, with useful life of 4 years. Assume the residual value of all the assets is zero and the straightline method is used. ​Ariel's monthly depreciation journal entry will include a​ ________.

a. credit to Accumulated Depreciation of $481
b. credit to Depreciation Expense of $5,772
c. debit to Accumulated Depreciation of $481
d. debit to Depreciation Expense of $5,772

Answers

Answer: a. credit to Accumulated Depreciation of $481

Explanation:

Find the monthly depreciation on all the assets;

Communications Equipment

= 9,600 / (8 years * 12 months)

= 9,600/96

= $100

Furniture

= 17,424 / (12 * 12)

= 17,424/144

= $121

Computer

= 12,480 / (4 * 12)

= 12,480/48

= $260

Add that up;

= 260 + 121 + 100

= $481

This figure will be debited to the depreciation expense account every month and credited to the Accumulated depreciation account to account for the reduction in Asset value.

Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 7.9%. What is the duration if the yield to maturity is 11.9%

Answers

Answer:

Duration of the bond = 2.83 years

Explanation:

PMT = 1000*6% = 60

YTM = 7.90%

Year    PMT        PV of PMT            Weight               Year*Weight

1             60     55.60704356    0.05847545953    0.05847545953

2            60     51.53572156      0.05419412375      0.1083882475

3          1060    843.8039056    0.8873304167       2.66199125

            Sum    950.9466707                                   2.82885495703

Duration of the bond = 2.82885495703

Duration of the bond = 2.83 years

Suppose VS's stock price is currently $20. A six-month call option on VS's stock with an exercise price of $15 has a value of $7.14. What is the price of an equivalent put option? The six-month risk-free interest rate is 5% per six-month period.

a. $1.43
b. $9.43
c. $8.00
d. $12.00

Answers

Answer: $1.43

Explanation:

To solve this, we would use the put call parity. We then calculate the value of the out which will be:

= $7.14 + $15/(1 + 5%) - $20

= $7.14 + $15/(1 + .05) - $20

= $7.14 + $15/(1.05) - $20

= $7.14 + $14.29 - $20

= $1.43

The price of an equivalent put option is $1.43

Which bond would you expect to pay the highest interest rate?

a. a bond issued by the U.S. governmentb.
b. a bond issued by General Motorsc.
c. a bond issued by New York Stated.
d. a bond issued by a new restaurant chain

Answers

Answer:

The bond that should pay the highest interest rate is:

d. a bond issued by a new restaurant chain.

Explanation:

This is based on the fact that the new restaurant chain is untested, has higher risk profile and the bondholders are assuming higher risks, and the bond cannot be compared to the bonds issued by the US government, New York State, and General Motors, in that order.  The new restaurant chain will be offering a higher rate of return than others because it is new to the bond market and would like to attract potential bond investors.   Without the higher rate, therefore, it will not be successful in the bond issuance.

Joseph will start school on 9/1/14. He is expected to attend school for four years and will need to pay tuition of $50,000 on September 1st of each year. His uncle wants to make an investment on 9/1/10 that will provide sufficient funds for four years of tuition. Assuming he can earn 5% annually, how much must invest on 9/1/10.?

a. $27,282
b. $37,976
c. $104,167
d. $200,000
e. $153,156

Answers

Answer:

e. $153,156

Explanation:

From 9/1/14, he needs $50,000 every year for 4 years to fund the tuition fees. Therefore, present value of the amount needed at 9/1/14 using the Present value of annuity due formula

= 50,000 * {1+ (1/(1.05)^4) } / 0.05 * (1.05)

= $186,162

$186,162 is the amount needed after 4 years. Amount you need to invest today to have this amount in four years = $186,162/(1.05)^4 = $186,162/1.21550625 = $153,156.40

What is business marketing?
please make it long

Answers

Answer:

Business marketing, also known as business-to-business marketing, occurs when a business markets and sells its products or services to another business or organization. The businesses that purchase these products may use them in manufacturing, to run their businesses or for resale. In consumer marketing, advertising can be broad and interaction with customers often takes place through large retailers. Business marketing differs in that it relies on much more personal, direct relationships between businesses.

Explanation:

One factor that affects the elasticity of demand for labor is its share of total production costs. The greater labor's share of production costs, the___________ elasticity of demand for labor. The year is 2035. In many occupations, robots are replacing humans. As it turns out, robots make very good factory workers but very poor ski instructors. Assuming the other determinants of demand for the two services are roughly similar, you would expect the demand for human ski instructors to be__________ the demand for human factory workers.

Answers

Answer:

The greater labor's share of production costs, the higher elasticity of demand for labor.

When labor costs are a high share of total production costs, the elasticity of labor demand is higher. For example, customer service jobs like fast foods, or gas pumping, have high labor costs as a percentage of total production costs, and these sectors have a very elastic labor demand.

you would expect the demand for human ski instructors to be less elastic the demand for human factory workers.

In the year 2035, with robots having replaced most humans in factory jobs, occupations such as ski instructor, or dance instructor, or musician, would have a low labor demand elasticity because these skills are not easily learned, or easily replicated by a robot, meaning that the humans specialized in those jobs will be more demanded, and the demand for their labor will be more stable.

Suppose that Merck (MRK) stock is trading for $36.70 per share with 2.11 billion shares outstanding while Boeing (BA) has 697.5 million shares outstanding and a market capitalization of $38.223 billion. Assume that you hold the market portfolio. Merck's market capitalization is closest to: _________

a. 330 shares.
b. 240 shares.
c. 780 shares.
d. 510 shares.

Answers

Answer:

the question asks one thing, but the options are not even close:

market capitalization = total stocks outstanding x market price per stock

Merck's market capitalization = 2.11 billion stocks x $36.70 = $77.437 billion

Market capitalization is about money, not the number of shares. It represents the market value of a company's equity.

In some cases oligopolies can benefit society by:

a)earning abnormal profits.

b)taking advantage of scale economies to produce at low average cost.

c)raising prices and reducing output.

Answers

Answer:

b) taking advantage of scale economies to produce at low average cost.

The Expense Account selected for inventory parts would normally have the account type ____________.

a. Revenue
b. Cost of Goods Sold
c. Income
d. Expense

Answers

Answer:

b. Cost of Goods Sold

Explanation:

An inventory turnover can be defined as a measure of the amount of times an inventory used or sold by an organization at a specific period of time. The inventory turnover is calculated by dividing cost of goods sold by average inventory.

The Expense Account selected for inventory parts would normally have the account type Cost of Goods Sold.

Many organizations are concerned about the rising cost of employee benefits and question their value to the organization and to the employees. In your opinion, what benefits are of greatest value to employees?What can management do to increase the value to the organization of the benefits provided to employees?

Answers

Explanation:

The benefits that organizations offer their employees are essential to add value to the job function. Through them, it is possible for the organization to attract and retain qualified employees, in addition to creating a favorable and positive organizational environment for the development of professional skills. The benefits help to motivate the employee and improve the perception and appreciation of their position and the company.

The benefits that most add value to employees are health and retirement plans, in addition to dental plans, paid vacations, etc. These benefits are not mandatory for the employer, but they are great differentials in differentiating jobs in the view of individuals.

A European investor can earn a 4.75 percent annual interest rate in Europe or 2.75 percent per year in the United States. If the spot exchange rate is $1.58 per euro, at what one-year forward rate would an investor be indifferent between the U.S. and European investments?

Answers

Answer:

To obtain the same returns, the interest rate in the United States should be 7.5%.

Explanation:

Since $ 1.58 dollars is equal to $ 1 euro, the difference between both currencies arises from the following calculation:

1 = 100

1.58 = X

((1.58 x 100) / 1) = X

158/1 = X

158 = X

Therefore, a euro is worth 58% more than a dollar is worth.

Thus, if the investment in Europe has an interest rate of 4.75%, to obtain the same return in dollars, an interest rate of 58% must be obtained, that is:

4.75 x 1.58 = X

7.5 = X

Thus, to obtain the same returns, the interest rate in dollars should be 7.5%.

Suppose that Megan receives higher pay at her workplace than her colleagues do, even though they perform essentially the same type of work. If Megan's productivity is about 25% higher than that of each of her colleagues, which of the following wage concepts can explain this wage disparity? Check all that apply.

Answers

Answer:

Megan can get more money by working at higher wages, longer hours, and retirement benefits. Also, they can get benefits such as free products and family discount. Megan would also like everything else that her colleagues asked for specifically.

Explanation:

Also, the colleagues would like to get a higher percentage that is parallel and  exponential to Megan's pay.

Zero Corp's total common equity at the end of last year was $350,000 and its net income was $70,000. What was its ROE

Answers

Answer:

ROE = 20%

Explanation:

Given:

Common equity = $350,000

Net income = $70,000

Find:

ROE

Computation:

ROE = [Net income/Common equity]100

ROE = [$70,000/$350,000]100

ROE = 20%

A wholesaler who takes over the whole marketing job nationally for one or a few manufacturers is called a:__________. a. merchant wholesaler. b. manufacturers' agent. c. specialty wholesaler. d. broker. e. selling agent.

Answers

Answer:

e. selling agent.

Explanation:

A selling agent is a person that acts on behalf of businesses to find buyers or sell property or goods.

Therefore, a wholesaler who takes over the whole marketing job nationally for one or a few manufacturers is called a selling agent.

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