You own one share of a non-dividend-paying stock. Because you worry that its price may drop over the next year, you decide to employ a rolling hedge strategy, which entails obtaining one 3-month European put option on the stock every three months, with the first one being bought immediately. You are given: (i) The continuously compounded risk-free interest rate is 8%. (ii) The stock’s volatility is 30%. (iii) The current stock price is 45. (iv) The strike price for each option is 90% of the then-current stock price. Your broker will sell you the four options but will charge you for their total cost now. Under the Black-Scholes framework, how much do you now pay your broker
Answers: 1
Business, 21.06.2019 14:30
What is the opportunity cost (in civilian output) of a defense buildup that raises military spending from 4.0 to 4.3 percent of an $18 trillion economy? instructions: enter your response rounded to the nearest whole number?
Answers: 3
Business, 22.06.2019 02:20
Archangel manufacturing calculated a predetermined overhead allocation rate at the beginning of the year based on a percentage of direct labor costs. the production details for the year are given below. calculate the manufacturing overhead allocation rate for the year based on the above data. (round your final answer to two decimal places.) a) 42.42% b) 257.14% c) 235.71% d) 1, 206.90% archangel production details.
Answers: 3
Business, 22.06.2019 11:30
You've arrived at the pecan shellers conference—your first networking opportunity. naturally, you're feeling nervous, but to avoid seeming insecure or uncertain, you've decided to a. speak a little louder than you would normally. b. talk on your cell phone as you walk around. c. hold an empowered image of yourself in your mind. d. square your shoulders before entering the room.
Answers: 2
Business, 22.06.2019 18:00
Biochemical corp. requires $600,000 in financing over the next three years. the firm can borrow the funds for three years at 10.80 percent interest per year. the ceo decides to do a forecast and predicts that if she utilizes short-term financing instead, she will pay 7.50 percent interest in the first year, 12.15 percent interest in the second year, and 8.25 percent interest in the third year. assume interest is paid in full at the end of each year. a)determine the total interest cost under each plan. a) long term fixed rate: b) short term fixed rate: b) which plan is less costly? a) long term fixed rate plan b) short term variable rate plan
Answers: 2
You own one share of a non-dividend-paying stock. Because you worry that its price may drop over the...
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