1. When the price of a soda from the campus vending machine was $0.50 per can, 100 cans were sold each day. After the price increased to $0.60 per can, sales dropped to 80 cans per day. Over this range, the absolute price elasticity of demand for soft drinks was approximately equal to

   	A.	1.00
   	B.	2.00
   	C.	1.47
   	D.	1.22

1 points   

QUESTION 9

1. Luna is a manufacturer of fashion jewelry. The CEO of Luna makes sure that the company frequently introduces new styles of jewelry to suit changes in tastes and stay a step ahead of her competitors. Which of the following success drivers of performance is the CEO using?

   	A.	cost competitiveness
   	B.	innovation
   	C.	service
   	D.	quality

Main Company sells 100 televisions on January 1, 2017, at a total price of €40,000 with a warranty guarantee that the product was free of any defects. The assurance warranties extend for a 2-year period and are estimated to cost €500.
Main also sold extended warranties for €800 related to the televisions covering 2 additional years beyond the assurance warranty period. Actual warranty costs were €150 in 2017 and €350 in 2018.
Prepare the journal entries that Main should make in:
1. January 1, 2017 related to the sale of the televisions and related warranties.
2. December 2017 for the €150 warranty costs incurred
3. December 2018 for the €350 warranty costs incurred
4. December 2019 and 2020 for the recognized additional (service-type) warranty.

Mr. Suphi buys 100 shares of ABC stock on margin. The share price is $50 and the initial margin is 50%. What is the maintenance margin on the account if the margin call is triggered at a share price of $35? Ignore the interest on the loan.

b) Mr. Suphi buys 200 shares of EFG stock on margin. The share price is $60 and the initial margin is 50%. What is Mr. Suphi’s rate of return on equity if he sells the stock a year later for $55 per share? Ignore the interest on the loan.

c) Mr. Suphi shorts 100 shares of XYZ stock at $50 per share. The initial margin is 50%. What is the maintenance margin if Mr. Suphi will receive a margin call when the stock price is $60?

— The stock’s price S is $100. After three months, it either goes up and gets multiplied by the factor U = 1.13847256, or it goes down and gets multiplied by the factor D = 0.88664332. — Options mature after T = 0.5 year and have a strike price of K = $105. — The continuously compounded risk-free interest rate r is 5 percent per year. — Today’s European call price is c and the put price is p. Call prices after one period are denoted by cU in the up node and cD in the down node. Call prices after two periods are denoted by cUD in the “up, and then down node” and so on. Put prices are similarly defined. Suppose a trader quotes a call price of $4.50. Then, you can make an immediate arbitrage profit of:

Group of answer choices

$7.66 by selling the synthetic call and buying the market-quoted call

$1.50 by buying the synthetic call and selling the market-quoted call

$7.66 by buying the synthetic call and selling the market-quoted call

$1.50 by selling the synthetic call and buying the market-quoted call

please provide explanation

— The stock’s price S is $100. After three months, it either goes up and gets multiplied by the factor U = 1.13847256, or it goes down and gets multiplied by the factor D = 0.88664332. — Options mature after T = 0.5 year and have a strike price of K = $105. — The continuously compounded risk-free interest rate r is 5 percent per year. — Today’s European call price is c and the put price is p. Call prices after one period are denoted by cU in the up node and cD in the down node. Call prices after two periods are denoted by cUD in the “up, and then down node” and so on. Put prices are similarly defined. Which set of arbitrage-free put prices (in dollars) is correct?

Group of answer choices

p = 2.00, pU = 0, and pD = 4.06

p = 15.03, pU = 4.06, and pD = 26.39

p = 8.41, pU = 0, and pD = 26.39

p = 8.41, pU = 2.00, and pD = 15.03

please provide explanation

A stock’s current price S is $100. Its return has a volatility of s = 25 percent per year. European call and put options trading on the stock have a strike price of K = $105 and mature after T = 0.5 years. The continuously compounded risk-free interest rate r is 5 percent per year. The Black-Scholes-Merton model gives the price of the European call as:

please provide explanation

Consider a 1-year European call option on 100 shares of SPY with a strike price of $290 per share. The price today of one share of SPY is $285. Assume that the annual riskless rate of interest is 3%, and that the annual dividend yield on SPY is 1%. Both rates are continuously compounded. Finally, SPY annual price volatility is 25%. In answering the questions below use a binomial tree with two steps. a) Compute u, d, as well as p for the binomial model. b) Value the option today using the binomial tree. c) How would you hedge today a long position in this option?

A stock price is $100 now. In one month it can go 10% up or down. In the second month it can go 10% up or down. The annual interest rate is 10% with continuous compounding. Use risk-­‐free portfolios to determine the value of: (do not use probabilities) a) A two-­‐month European call with strike price 100 b) A two-­‐month European call with strike price 104

The daily selling price per 100 pounds of buffalo meat is normally distributed with a mean of 70 dollars, and the probability that the daily price is less than 85 dollars is 0.9332. Four days are chosen at random, what is the probability that at least one of the days has a price that exceeds 80 dollars?

                A stock price is currently $100. Over each of the next two six-month periods it is expected to go up by 10% or down by 8%. The risk-free interest rate is 8% per annuum with continuous compounding. What is the value of a one-year European call option with a strike price of $105?