A share of stock is currently worth $90 and has a volatility of 20%. The domestic risk-free interest rate is 5% and the stock does not pay any dividend. Use a two-step binomial tree to derive a) the value of a European four-month call option written on a 100 shares of stock with a strike price of $91 per share, and b) the position in shares of stock (long or short) which will hedge a short position in the European call option today.

13. The utility function of consumers who spend both their income and buy X and Y goods was given U=XY. (U is the size of utility, X is the consumption of X material, Y is the consumption of Y goods) The consumer's income is 100, and the prices of X and Y goods are initially 2 and 10. If the price of X material rises from 2 to 8, what is the compensation income for this change (the minimum income that achieves the same utility level as before)?

Lie Around Furniture manufactures two​ products: Couches and Beds.

The following data are​ available: Couches Beds Sales price $ 510.00 $ 710.00 Variable costs $ 370.00 $ 395.00

The company can manufacture 3 couches per machine hour and 2 bed per machine hour. The​ company's production capacity is 2 100 machine hours per month. To maximize​ profits, what product and how many units should the company produce in a​ month?

Part A Bank ABC is offering a bond that pays $100 in interest at the end of each of the next three years and repays $1,000 in principal at the end of the 3'd year. The interest rate is I2%. Calculate the bond's selling price. Part B Is this bond being offered at a discount, at a premium or at par?

Part C What is the coupon rate on this bond?

Part D What is the return on this bond if it is sold within 2years when the YTM decreases down to 10%?

c = 100 + 0.8 (y - t)

i = 500 - 50r

g = 400

t = 400

M^d = P(0.2y + 500 – 25r)

Price level is fixed at 1.

The money supply is 520

1. The government increases taxes by one unit.

1. Calculate the shift of the IS curve.
2. What is the change in the level of aggregate demand?
3. What is the change in the interest rate and investment?
4. What is the change in disposable income and consumer expenditure?
   e. What is the change in the government’s budget balance?

a-   Use the following data and find MC, AC, MR, and TP. Also, knowing P=100, decide how many units you produce?

. b-   Change the price to P2=120. How many will you produce?

c-   Use numbers from a, an b, and show a supply relation and plot it.

Q   TC    MC   AC   TR   MR   TP   

1 -  70

2 - 120

3 - 180

4 -  280

5 - 400

6 - 600

2. A firm has a demand and cost function given by: D: P=100-Q, C: P=10+2q1+4q2

a) Demonstrate whether this firm has economies to scale.

b) Demonstrate whether this firm has economies of scope.

c) Assume that the firm is the only firm in the market, derive graphically and numerically the optimal quantity, price and the profits/losses.

d) What is the Lerner Index? Provide a numerical value and explain the relevance of the index/how it is used

Please answer using Excel.

Company ABC would like to sell an additional 1000 shares using the Dutch Auction method. Using the table below, Bidder D will receive how many shares? Bidder Quantity Price A 500 $30 B 300 $28 C 100 $25 D 400 $20 E 300 $19 Select one: a. 520 shares b. 400 shares c. 378 shares d. 308 shares e. 290 shares