Business, 12.12.2019 06:31 abell23000
In addition to the five factors discussed in the chapter, dividends also affect the price of an option. the black-scholes option pricing model with dividends is: c=s × e−dt × n(d1) − e × e−rt × n(d2) d1= [ln(s /e ) +(r−d+σ2 / 2) × t ] (σ − t√) d2=d1−σ × t√ all of the variables are the same as the black-scholes model without dividends except for the variable d, which is the continuously compounded dividend yield on the stock. the put-call parity condition is altered when dividends are paid. the dividend-adjusted put-call parity formula is: s×e−dt+p=e×e−rt+c where d is the continuously compounded dividend yield. a stock is currently priced at $88 per share, the standard deviation of its return is 56 percent per year, and the risk-free rate is 5 percent per year, compounded continuously. what is the price of a put option with a strike price of $84 and a maturity of six months if the stock has a dividend yield of 3 percent per year? (do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)
Answers: 1
Business, 22.06.2019 14:00
Which of the following would not generally be a motive for a firm to hold inventories? a. to decouple or separate parts of the production process b. to provide a stock of goods that will provide a selection for customers c. to take advantage of quantity discounts d. to minimize holding costs e. all of the above are functions of inventory.
Answers: 1
Business, 22.06.2019 20:00
A$100 million interest rate swap has a remaining life of 10 months. under the terms of the swap, the six-month libor is exchanged semi-annually for 12% per annum. the six-month libor rate in swaps of all maturities is currently 10% per annum with continuous compounding. the six-month libor rate was 9.6% per annum two months ago. what is the current value of the swap to the party paying floating? what is its value to the party paying fixed?
Answers: 2
Business, 22.06.2019 21:20
Which of the following best explains why large companies pay less for goods from wholesalers? a. large companies are able to pay for the goods they purchase in cash. b. large companies are able to increase the efficiency of wholesale production. c. large companies can buy all or most of a wholesaler's stock. d. large companies have better-paid employees who are better negotiators.
Answers: 2
Business, 22.06.2019 23:30
Mystic bottling company bottles popular beverages in the bottling department. the beverages are produced by blending concentrate with water and sugar. the concentrate is purchased from a concentrate producer. the concentrate producer sets higher prices for the more popular concentrate flavors. a simplified bottling department cost of production report separating the cost of bottling the four flavors follows:
Answers: 3
In addition to the five factors discussed in the chapter, dividends also affect the price of an opti...
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