Question
In: Finance
A stock is trading ex-rights; the market price per share of common stock is $75; the...
A stock is trading ex-rights; the market price per share of common stock is $75; the number of rights needed to buy one new share is 3, and the value of a right is 5. Calculate the subscription price.
- A. 60
- B. 65
- C. 70
- D. 80
Solutions
jeff jeffy answered 4 months agoRelated Solutions
The stock price of a company is currently $75 per share. A call option on the...
The stock price of a company is currently $75 per share. A call
option on the company’s stock has an exercise price of $80 and six
months to expiration. The continuous riskfree rate is 5% per year
and the stock's volatility is 28% per year.
A.) Use the Black-Scholes formula to find the value of the call
option.
B.) Calculate the hedge ratio for the call option.
The market price of a share of common stock is determined by Select one: a. the...
The market price of a share of common stock is
determined by
Select one:
a. the stock exchange on which the stock is listed
b. the president of the company
c. individuals buying and selling the stock
d. the board of directors of the firm
When ____ is greater than the cost of capital the
project should be accepted
Select one:
a. profitability index
b. payback period
c. internal rate of return
d. net present value
____ is defined as...
MetLife, Inc. stock is currently trading at $50 per share. The price of MetLife stock can...
MetLife, Inc. stock is currently trading at $50 per share. The
price of MetLife stock can either increase by 20% or decrease by
20% each year. The probability of an increase is equal to the
probability of a decrease (). The risk-free rate of return is 10%
per year. What is the current equilibrium price (premium) of a
1-year European call option on MetLife with a strike price of
$50?
MetLife, Inc. stock is currently trading at $50 per share. The price of MetLife stock can...
MetLife, Inc. stock is currently trading at $50 per share. The
price of MetLife stock can either increase by 20% or decrease by
20% each year. The probability of an increase is equal to the
probability of a decrease (pu=pd= 0.5). The risk-free rate of
return is 10% per year. What is the current equilibrium price
(premium) of a 1-year European call option on MetLife with a strike
price of $50?
Sears, Inc. common stock is currently trading on the NYSE at a price of $30 per...
Sears, Inc. common stock is currently trading on the NYSE at
a
price of $30 per share with 24,000,000 shares outstanding.
Dividend just paid is
$1.50 per share and is forecasted to grow at a constant rate of
12% in the future.
U.S. 10-year Treasury Notes are currently yielding 2.5% and
Sear’s
outstanding 10-year debt with a face value of $50 million is
currently trading at
96% of face value and pays annual interest of 10%. The expected
rate of...
The trading price of the ABC stock has been around $100 per share for the past...
The trading price of the ABC stock has been around $100 per
share for the past months, and you believe it is going to stay in
that range for the next 3 months. The price of a 3-month put option
with a strike price of $100 is $10.
a) (4 points) If the risk-free interest rate is 5% p.a. with
continuous compounding, what is the price of a 3-month call option
on ABC stock at a strike price of $100...
ZAZ stock is currently trading at $163 per share. A dividend of $1.47 per share is...
ZAZ stock is currently trading at $163 per share. A dividend of
$1.47 per share is expected to be paid on the stock in two months.
A three month European put option with $165 strike on ZAZ is
trading at $1 in the options market.
1. Does an arbitrage opportunity exist regarding securities
markets for T-Bills, ZAZ stock and this put option? Explain
2. Completely specify a set of trades now that exploit the
arbitrage opportunity.
3. Compute the profit...
By maximizing the price per share of a common stock, we will ensure shareholders' wealth is...
By maximizing the price per share of a common stock, we will
ensure shareholders' wealth is maximized.
True
False
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $75,...
Dinklage Corp. has 9 million shares of common stock outstanding.
The current share price is $75, and the book value per share is $6.
The company also has two bond issues outstanding. The first bond
issue has a face value of $85 million, a coupon of 10 percent, and
sells for 96 percent of par. The second issue has a face value of
$65 million, a coupon of 11 percent, and sells for 109 percent of
par. The first issue...
Dinklage Corp. has 9 million shares of common stock outstanding. The current share price is $75,...
Dinklage Corp. has 9 million shares of common stock outstanding.
The current share price is $75, and the book value per share is $6.
The company also has two bond issues outstanding. The first bond
issue has a face value of $100 million, a coupon rate of 4 percent,
and sells for 96 percent of par. The second issue has a face value
of $85 million, a coupon rate of 3 percent, and sells for 108
percent of par. The...
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