In: Finance

Suppose that a stock price is $10.00 per share at current time and at the end of three months the stock price may either move up to $11.00 per share or down to $9.00 per share. Consider a European call option which allows you to buy the stocks at $10.50 per share at the end of three months. The risk free rate is 12% per year.

Find the fair price for the option.

The current price of Parador Industries stock is $44 per share.
Current sales per share are $21.35, the sales growth rate is 4
percent, and Parador does not pay a dividend. The expected return
on Parador stock is 13 percent.
a. Calculate the sales per share one year
ahead. (Round your answer to 2 decimal
places.)
b. Calculate the P/S ratio one year ahead.
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)

Suppose that the current stock price of Land's Outdoors is $55
per share. Over the next year you expect the following:
State of Land's
Probability
Dividend @ year-end
Stock Price @ year-end
Expansion
25%
$3
$70
Neutral
40%
$1
$60
Contraction
35%
$0
$45
What is the expected return on Land's over the next year? What
is the expected risk, as measured by standard deviation, of an
investment in Land's over the next year? (Do not round
intermediate calculations. Round...

Suppose you own stock in a company. The current price per share
is $25. Another company has just announced that it wants to buy
your company and will pay $35 per share to acquire all the
outstanding stock. Your company’s management immediately begins
ﬁghting off this hostile bid. Is management acting in the
shareholders’ best interests? Why or why not?

Suppose you own stock at AC Milan Berhad. The current price per
share is RM30. Another company has just announced that it wants to
buy your company and will pay RM40 per share to acquire all the
outstanding stock. Your company’s management immediately begins
fighting off this hostile bid. Is management acting in the
shareholders’best interest? Elaborate on your opinion on this
matter.
Profitability based on short-term goals could be at the expense
of long term sustainability of an organization,...

The current stock price for a company is $42 per share, and
there are 6 million shares outstanding. This firm also has 230,000
bonds outstanding, which pay interest semiannually. If these bonds
have a coupon interest rate of 9%, 10 years to maturity, a face
value of $1,000, and an annual yield to maturity of 7.8%, what is
the percent market value of debt for this firm? (Answer to the
nearest hundredth of a percent, but do not use a...

The current stock price for a company is $48 per share, and
there are 5 million shares outstanding. The beta for this firms
stock is 1.2, the risk-free rate is 4.2, and the expected market
risk premium is 6.4%. This firm also has 120,000 bonds outstanding,
which pay interest semiannually. These bonds have a coupon interest
rate of 6%, 10 years to maturity, a face value of $1,000, and an
annual yield to maturity of 8.1%. If the corporate tax...

The current stock price for a company is $47 per share, and
there are 8 million shares outstanding. The beta for this firms
stock is 1, the risk-free rate is 4.5, and the expected market risk
premium is 5.9%. This firm also has 250,000 bonds outstanding,
which pay interest semiannually. These bonds have a coupon interest
rate of 9%, 23 years to maturity, a face value of $1,000, and an
annual yield to maturity of 8.2%. If the corporate tax...

The current stock price for a company is $43 per share, and
there are 7 million shares outstanding. The beta for this firms
stock is 1.1, the risk-free rate is 4.8, and the expected market
risk premium is 6.5%. This firm also has 290,000 bonds outstanding,
which pay interest semiannually. These bonds have a coupon interest
rate of 9%, 18 years to maturity, a face value of $1,000, and an
annual yield to maturity of 8.3%. If the corporate tax...

The current stock price for a company is $37 per share, and
there are 4 million shares outstanding. This firm also has 280,000
bonds outstanding, which pay interest semiannually. If these bonds
have a coupon interest rate of 8%, 30 years to maturity, a face
value of $1,000, and an annual yield to maturity of 8.4%, what is
the percent market value of debt for this firm? (Answer to the
nearest hundredth of a percent, but do not use a...

The current stock price for a company is $38 per share, and
there are 8 million shares outstanding. The beta for this firms
stock is 0.8, the risk-free rate is 4.3, and the expected market
risk premium is 6.2%. This firm also has 230,000 bonds outstanding,
which pay interest semiannually. These bonds have a coupon interest
rate of 7%, 28 years to maturity, a face value of $1,000, and an
annual yield to maturity of 8%. If the corporate tax...

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