A futures price is currently 100. It is expected to move up to 120 or down to 70 over the next year. The risk-free interest rate is 6%. What is the value of a 1-year call option with a strike price of 98?

Group of answer choices

15

10.4

7.2

5.7

The price of a stock is currently $100 per share. The premium on a European put on this share at exercise price $100 (“on the money”) is $5 per share.

a. Suppose an investor purchases this stock and buys a put option for each share she buys. Draw the profit “profile” (profits that would result from every possible stock price outcome by the expiration date of the option). Explain.

b. Compare this pattern with the pattern that results from buying a call option on this stock at the same exercise price. Which is better, the call option or the position in (a)? Explain.

The stock price is $100. There are two European options that expire in 1 year with an exercise price of $110. The call option premium is $3 and the put option premium is $12.5. The risk free rate is 6% compounded annually. Is Put-Call Parity violated? If so, you must show the appropriate strategy to capture that profit. You must show a full arbitrage table with payoffs today and in the future. Round to 4 decimals

SHOW YOUR WORK TO GET CREDIT FOR ANY CALCULATIONS

You are interested to value a put option with an exercise price of $100 and one year to expiration. The underlying stock pays no dividends, its current price is $100, and you believe it either increases to $120 or decreases to $80. The risk-free rate of interest is 10%. Calculate the put option's value using the binomial pricing model, presenting your calculations and explanations as follows:

a. Draw tree-diagrams to show the possible paths of the share price and put payoffs over one year period. (Note: Show the numbers that are known and use letter(s) for what is unknown in your diagrams.)

b. Compute the hedge ratio.

c. Find the put option price. Explain your calculations clearly.

In 100 words One method of price discrimination for firms is the use of coupons and rebates. Firms are basically allowing consumers to self-identify their respective price elasticities of demand for a product. Describe the last time you used a coupon or a rebate, and another time where you knew a coupon might be available and yet chose to not bother with it. Make sure to explain how the opportunity cost of your time and effort played a part in the choice you made. Do you think price discrimination through coupons is fair? Should there be laws against this behavior? Why or why not?Please type answer in detail

You are interested to value a put option with an exercise price of $100 and one year to expiration. The underlying stock pays no dividends, its current price is $100, and you believe it either increases to $120 or decreases to $80. The risk-free rate of interest is 10%. Calculate the put option's value using the binomial pricing model, presenting your calculations and explanations as follows:

a. Draw tree-diagrams to show the possible paths of the share price and put payoffs over one year period. (Note: Show the numbers that are known and use letter(s) for what is unknown in your diagrams.)

b. Compute the hedge ratio.

c. Find the put option price. Explain your calculations clearly.

If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced

A stock that does not pay dividend is trading at $100. The stock price will increase by 10% or decrease by 10% in one year. After that, the stock price will increase or decrease by 20% in the second year. The risk-free interest rate is 5% per annum with continuous compounding. Value a two-year American put option with strike price of $102. Note that risk-neutral probabilities or replicating portfolios may differ across two periods. You must also check for early exercise.

The futures price of gold is $1,250. Futures contracts are for 100 ounces of gold, and the margin requirement is $5,000 a contract. The maintenance margin requirement is $1,500. You expect the price of gold to rise and enter into a contract to buy gold.

a)How much must you initially remit?

b)If the futures price of gold rises to $1,255, what is the profit and percentage return on your position?

c)If the futures price of gold declines to $1,248, what is the loss and percentage return on the position?

d)If the futures price falls to $1,238, what must you do?

e)If the futures price continues to decline to $1,210, how much do you have in your account?

f)How do you close your position?

    Per Unit .       % of sales

Selling price . $75 . 100%

Variable Expenses . $45 . 60%

Contribution Margin . $30 40%

Fixed expenses are $75,000 per month and the company is selling 3,000 units per month.

2. Refer to the original data . Management is considering using higher quality components that would increase variable cost by $3 per unit. The manager believes that the higher quality product would increase sales by 15% per month. Should the higher - quality components be used. Show all calculations to justify your answers or response.  

Question #2 Use contribution Margin Income Statement approach to answer the following questions.

   Total Per unit

Sales (8000 units) $208000 $26

Variable Expenses $144000 . $18

Contribution Margin . $64,000 . $8

Fixed Expenses $56,000

Net Operating Income $8000

Prepare contribution format income statement under each of the following conditions (9consider each case independently)

1. The Sales volume increases by 50 units

2. The sales volume decreases by 50 units

3. The sales volume is 7,000 units.

Show all calculations.