A put option and call option with an exercise price of $85 and three months to expiration sell for $3.15 and 6.12 respectively. If the risk-free rate is 4.8 percent a year, compounded continuously. What is the current stock price?
A put option and call option with an exercise price of $60 expire in four months and sell for $1.35 and $5.30, respectively. If the stock is currently priced at $63.38, what is the annual continuously compounded rate of interest?
A call option with an exercise price of $45 and four months to expiration has a price of $3.80. The stock is currently priced at $42.75, and the risk-free rate is 5 percent per year, compounded continuously. What is the price of a put option with the same exercise price?
On December 31, 2009, Garner Hot Rods issued $2,000,000 of 6 percent, 10-year bonds. Interest is payable semiannually on June 30 and December 31. Required: What is the issue price if the bonds are sold to yield 8 percent?
Birdie Golf, Inc., has been in merger talks with Hybrid Golf Company for the past six months. After several rounds of negotiations, the offer under discussion is a cash offer of $155 million for Hybrid Golf. Both companies have niche markets in the golf club industry, and both believe that a merger...
A quality control engineer wants to draw attention to the car parts that require repair most often, so she uses a Pareto chart to illustrate the frequencies of repairs for the various car parts. Does It Make Sense? For Exercises, determine whether the statement makes sense (or is clearly true) or...
For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.) A. To record receipt of unearned revenue. B. To record this period’s earning of prior unearned revenue. C. To record...
Fact Pattern B - Questions #6 through #9: The Purchaser is paying an account payable of $5,000 for previously purchased merchandise with cash and taking advantage of a 10% discount (10/10 - n/30) offered by the Seller for early payment. Question #6. Under the perpetual method of accounting for...
A firm can get $1,000,000 in exchange of 25% of its equity. After investing the amount raised in the firm, the firm expects to generate $300,000 in FCF next year which is expected to grow at 3% in perpetuity after that. a) Calculate the cost of capital to the firm.b )How does this cost relate to...
A 1.50g piece of copper metal is placed in 185mL of a 0.236 M AgNO3 solution. 1. What might you observe? 2. What is the mass of silver metal produced in the reaction? 3. What is the concentration of the copper(II) ion produced (assume no change in vol)?