The price of a non-dividend-paying stock is $45. The strike price of a six-month American put option is $50. The risk-free rate is 3% (continuously compounded). Which of the following is a lower bound for the option such that there are arbitrage opportunities if the price is below the lower bound and no arbitrage opportunities if it is above the lower bound?
In: Finance
Consider the following information on the stock market.
|
Company |
Shares Outstanding |
Price, beginning of year |
Price, end of year |
|
A |
200 |
$58 |
$94 |
|
B |
500 |
$20 |
$25 |
|
C |
1000 |
$70 |
$6 |
In: Finance
Note down price of FaceBook Inc. dated 1st November, and then note down price of FaceBook dated 28th Feb. Calculate holding period return for FaceBook for given time period. Now research internet to get risk-free rate of return, market return and beta for FaceBook. Appropriately refer all information and give reasons for selecting this data. Then calculate value of value of FaceBook using CAPM Model.
In: Finance
A dealer quotes a bid price of $130 and an ask price of $131 for every share of Apple stock. If you sell an Apple share to this dealer, at what price will you sell?
$140.2 $131 $140.1 $130
In: Finance
Consider the following information on the stock market.
|
Company |
Shares Outstanding |
Price, beginning of year |
Price, end of year |
|
A |
200 |
$58 |
$94 |
|
B |
500 |
$20 |
$25 |
|
C |
1000 |
$70 |
$6 |
In: Finance
|
Consider two put options differing only by exercise price. The one with the higher exercise price has |
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In: Finance
If the market price of a stock reflects all relevant information, what does its market price reflect?
| a. |
the stock’s par value |
|
| b. |
the stock’s exogenous value |
|
| c. |
the stock’s intrinsic value |
|
| d. |
the stock’s extrinsic value |
In: Finance
Let X = strike price and S = share price. A put option is deep out-of-the-money if _____________ (choose the best answer from the list below to complete the sentence). a)X/S is between 1.06 and 1.15
b)X/S is between 1.01 and 1.05
c)X/S is equal to 1.00
d)X/S is between 0.95 and 0.99
e)X/S is between 0.85 and 0.94
In: Finance
Explain the different types of price discrimination. Then identify a real-world example of price discrimination (preferably not one from the unit lesson), and explain which type of price discrimination it is. Next, using the good from your own chosen price discrimination as an example, illustrate how the good fits the criteria necessary for successful price discrimination. Finally, discuss how the price discrimination example leads to an increase in total benefit to society. Include in your discussion an evaluation of the effects on people paying the higher price and the effects on people paying the lower price.
Please do not use airlines, hotels or sporting event as an example.
In: Economics
Find the Black-Scholes price of a six-month call option written on €100,000 with a strike price of $1.0000/€. The current exchange rate is $1.125/€. The U.S. risk-free rate is 2 percent over the period and the euro-zone risk-free rate is 1 percent. The volatility of the underlying asset is 10.5 percent.
$0.1309/€
$0.1682/€
$0.1452/€
$0.0016/€
In: Finance