In: Finance
The price of a zero-coupon bond (ZCB) that matures at time t=10 and that has face value 100 is $61.62
Build an n = 10 binomial model lattice model with the following parameters to compute the price of an American call option on the same ZCB with the expiration t = 6 strike = 80.
r0,0 = 5%
u = 1.1
d = 0.9
q = 1 - q = ½
In: Finance
The price of a zero-coupon bond (ZCB) that matures at time t=10 and that has face value 100 is $61.62
Build an n = 10 binomial model lattice model with the following parameters to compute the price of a forward contract on the same ZCB where the forward contract matures at time t = 4
r0,0 = 5%
u = 1.1
d = 0.9
q = 1 - q = ½
In: Finance
The current price of a non-dividend-paying stock is $80. Over the next year it is expected to rise to $92 or fall to $79. Assume the risk free rate is 5%. An investor buys a put option with a strike price of $84. What is the value of the option today? How would the investor hedge the put option position? Assume that the option is written on 100 shares of stock.
In: Finance
You need to set up a network with over 100 workstations. When asking two different vendors, both provided the switches you want, but the price difference is huge. There must be something that makes the price differ that much. But what? What are the consequences if you use a cheaper alternative? What is the threshold of when to use a cheaper switch and when to use the more expensive switch?
In: Computer Science
Consider the following bonds:
|
Bond |
Coupon Rate (annual payments) |
Maturity (years) |
|
A |
0.0% |
15 |
|
B |
0.0% |
10 |
|
C |
4.2% |
15 |
|
D |
8.2% |
10 |
What is the percentage change in the price of each bond if its yield to maturity falls from
6.9 % to 5.9 %?
The price of bond A at 6.9% YTM per $100 face value is $? (Round to the nearest cent.)
In: Finance
Think of two (less obvious) applications of law of demand. They should NOT be about any purchase/consumption in any specific market.
For example, you can’t say “Apple price falls from $3 to $2 and quantity rises from 100 to 200”. They should be different from the examples in textbook or lecture notes.
Please specify what is the price and what is the quantity demanded.
In: Economics
The 2019 demand and supply for Montreal cannabis are:
Demand: P=100-x
Supply: P=10+x
As a result of a successful trade mission to New Zealand, it has agreed to buy Montreal cannabis. Their demand is:
P=80-2x
What are the economic effects of this trade? Show diagram.
Original Price and output? New price and output? Consumption by Montreal? Consumption by New Zealand?
In: Economics
12. Suppose a monopoly firm faces the market demand Q = 500 – p and has cost function C = 100 + Q2 . Find the firm’s profit, CS, PS, and DWL for the following scenarios:
a. The monopoly firm charges a single price
b. The monopoly firm perfectly price discriminate
c. The monopoly firm adopts a block-pricing schedule with 2 quantity blocks
In: Economics
Consider a 2-year bond with a principal of $100 that provides coupons at the rate of 3.8% per annum semiannually. Suppose the yield on this bond is 6.1% per annum with continuous compounding.
(a) What is the duration of this bond?
(b) Suppose the yield on this bond increases by 0.1%.
i. Calculate the new bond price exactly.
ii. Estimate the new bond price approximately using duration.
In: Finance