Explain the difference between a bid price and an asked price and also explain why the prices are different.

Stock price = £60. In 2 months, two months the price will be either £66 or £54. The risk-free interest rate is 10% p.a on a continuous compounding basis.

What will be the value of a 2-month European put option with a strike price of £62?

Please provide a step by step explanation as I would like to fully understand and not just copy the answer. Thank you :)

Compare the price elasticities of demand at every price for the two demand curves: x1 = 450 - p1 and x1 = 150 - 1/3 p1. Explain your answer using a graph.

The current price of gold is $1688 per ounce. The volatility of gold price is 20% per annum. The continuously-compounded risk-free rate is 5% per annum. What is the value of a 3-month call option on an ounce of gold with a strike price of $1750 according to the BSM model?

Find the price for a call option with the following inputs:

Current stock price = $25 Strike price of option = $30

Time until option expires = 6 months Risk-free rate = 3%

Standard deviation of stock returns = 18%

Using the Black Scholes Option Pricing Model Formula

Given all the information above, what would be the value of a put option on the above stock with a strike price of $30?

1.The price of a three-month European put option on a stock with a strike price of $60 is $5. There is a $1.0067 dividend expected in one month. The current stock price is $58 and the continuously compounded risk-free rate (all maturities) is 8%. What is the price of a three-month European call option on the same stock with a strike price of $60?

Select one:

a. $5.19

b. $1.81

c. $2.79

d. $3.19

2.For the above question, if the price of a three-month European call option on the same stock with a strike price of $60 is $4.50, are there any arbitrage opportunities? If so, what are the transactions to achieve risk-free profits?

Select one:

a. There are arbitrage opportunities: write the put, short sell the share, buy the call, and invest the rest.

b. There are arbitrage opportunities: write the put, write the call, short sell the share, and invest the rest.

c. There are NO arbitrage opportunities

d. There are arbitrage opportunities: write the call, borrow some money, buy the put, and buy the share.

3.For the previous question where the price of a three-month European call option on the same stock with a strike price of $60 is $4.50, are there any arbitrage opportunities? If so, how much risk-free profits can an arbitrageur make in three months?

Select one:

a. There are arbitrage opportunities. The risk free profit in three months would be $1.34

b. There are arbitrage opportunities. The risk free profit in three months would be $2.11

c. There are NO arbitrage opportunities

d. There are arbitrage opportunities. The risk free profit in three months would be $0.70

A bond had an issue price of $1,000, a redemption price of $1,000, a coupon rate of 8%, and pays semiannual interest on Feb 1 and Aug 1. On Oct 1, 2017, an investor buys the bond for $1,040. The investor sells the bond on May 1, 2019 for $1,050.

a. What is the investor’s basis in the bond?

b. If the investor is a cash basis taxpayer how much interest income must the investor include in income in 2017, 2018 and 2019?

c. If the investor is an accrual basis taxpayer how much interest income must the investor include in income in 2017, 2018 and 2019?

d. How much capital gain or loss would the investor realize in 2019?

Compare and contrast the price elasticity of supply and also price elasticity of demand.

What is an example of a good or service you buy where your demand is price elastic, so its price is important to your decision to buy it or not?

Also define income elasticity and how it distinguishes between normal and inferior goods and please give an example of a normal and an inferior good.

(a) Explain the welfare impact of agricultural price supports if the support price is higher than the world (import) price, but the support price is below the price that would make the quantity demanded equal to the quantity supplied if there were no international trade in the commodity.

(b) Explain the welfare impact of agricultural price supports if the support price is higher than the world (export) price, and the export price is above the price that would make the quantity demanded equal to the quantity supplied if there were no international trade in the commodity.

Illustrate your answers to (a) and (b) graphically. Label the graphs

1.The price elasticity of demand for a liver transplant is perfectly inelastic. The price elasticity of demand is ___________.

A. zero

B. one

C. infinity

D. undefined

2. The price of car batteries increases by 10 percent and the quantity demanded decreases by 10 percent. What is the price elasticity of car batteries?

A. Elastic, and revenue will decrease

B. Elastic, and revenue will increase

C. Inelastic, and revenue will increase

D. Unit elastic, and revenue will not change

3.Assume that the demand for unskilled workers is inelastic. What will the imposition of an effective minimum wage do?

A. Increase total income of minimum wage earners and, as time passes, increase unemployment

B. Increase total income of minimum wage earners and, as time passes, decrease unemployment

C. Decrease total income of minimum wage earners and, as time passes, increase unemployment

D. Decrease total income of minimum wage earners and, as time passes, decrease unemployment