Suppose company A stock is last time traded at 43. 26$, and our analysis shows that in one year from now,


its price would either increase or decrease by 35%. (i. E. D=0. 65, u=1. 35) Assume that risk-free rate is 1%


and the company pays no dividend in this time period.



1) What would be the payoff for a European Put Option written on Company A equity, with time to maturity


of 1 year, and strike price of 35$? Calculate the payoff for the up and down scenarios

Answers

Answer 1

The payoff for a European Put Option written on Company A equity, with a time to maturity of 1 year and a strike price of $35, is $23.409 in the up scenario and -$6.911 in the down scenario.

To calculate the payoff for a European Put Option written on Company A equity, we need to first determine the possible future stock prices at the end of the one-year time period.

Given that the stock price could either increase or decrease by 35%, we can calculate the possible future stock prices as follows:

u = 1.35

d = 0.65

S0 = 43.26

K = 35

Possible future stock prices:

Su = S0 * u = 43.26 * 1.35 = 58.409

Sd = S0 * d = 43.26 * 0.65 = 28.089

Next, we can calculate the payoff for the European Put Option written on Company A equity, assuming a strike price of $35:

If the stock price is greater than the strike price (i.e., the option is out of the money), the payoff is 0.

If the stock price is less than or equal to the strike price (i.e., the option is in the money), the payoff is the difference between the strike price and the stock price.

Payoff for the up scenario:

Su - K = 58.409 - 35 = 23.409

Payoff for the down scenario:

Sd - K = 28.089 - 35 = -6.911 (note the negative sign, since the option is out of the money)

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Related Questions

TRUE OR FALSE: when you have a credit card or loan, it is better to have higher interest rate

Answers

Answer: Lower interest rate are better. Higher interest rate is worse

Explanation:

A lower interest rate is better when borrowing money through credit cards or loans. You will be paying less. High interest rates are only good when you are the lender.

(5 pts) In the long run, which plan has the higher payout? Plan A Plan Payout P(Payout $70,000 0.57 Payout P(Payout) -$15,000 0.38 $85,000 0.28 $70,000 0.06 $90,000 0.15 $75,000 0.56

Answers

Plan A has a higher payout compared to Plan P.

The long-run plan with the higher payout is Plan A. The payout can be calculated by multiplying the payout of each outcome with its probability, then adding all the values together. Let's solve for both Plan A and Plan P.

Plan A:

Payout $70,000 with a probability of 0.57

Payout $85,000 with a probability of 0.28

Payout $90,000 with a probability of 0.15

The formula to calculate expected payout is:

E(X) = Σ (P(x) * C(x)), where x is each outcome and C(x) is its respective payout.

Using this formula, we have:

E(X) = (0.57 * 70000) + (0.28 * 85000) + (0.15 * 90000)

E(X) = 39900 + 23800 + 13500

E(X) = $77,200

Plan P:

Payout of $70,000 with a probability of 0.06

Payout of -$15,000 with a probability of 0.38

Payout of $85,000 with a probability of 0.28

Payout of $75,000 with a probability of 0.56

Payout of $90,000 with a probability of 0.15

Using the expected payout formula, we have:

E(X) = (0.06 * 70000) + (0.38 * -15000) + (0.28 * 85000) + (0.56 * 75000) + (0.15 * 90000)

E(X) = 4200 + -5700 + 23800 + 42000 + 13500

E(X) = $74,700

Therefore, Plan A has a higher payout of $77,200 compared to Plan P's $74,700.

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ive been stuck on this PLEASE help-- how do I find marginal cost?


this is my assignment:

What is the marginal cost of nitrogen in our example when nitrogen is priced at 25 cents a pound vs. if it was 35 cents a pound?

ive been stuck on this PLEASE help-- how do I find marginal cost?this is my assignment:What is the marginal
ive been stuck on this PLEASE help-- how do I find marginal cost?this is my assignment:What is the marginal

Answers

Answer:

Marginal cost is calculated by dividing the change in total cost by the change in quantity. Let us say that Business A is producing 100 units at a cost of $100. The business then produces at additional 100 units at a cost of $90. So the marginal cost would be the change in total cost, which is $90.

__________is the name for the doctrine that holds that the manufacturer of a product has legal responsibilities to compensate the user of that product for injuries suffered because the product's defective condition made it unreasonably dangerous, even though the manufacturer has not been negligent in permitting that defect to occur.

Answers

Answer:

Product liability

During 2021, it cost Waterway, Inc. $14 per unit to produce part 15. During 2022, it has increased to $19 per unit. In 2022, Oriole Company has offered to provide Part T5 for $11 per unit to Waterway. As it pertains to the make-or-buy decision, which statement is true? a Incremental revenues are $5 per unit. b Incremental costs are $3 per unit. c Net relevant costs are $3 per unit. d Differential costs are $8 per unit.

Answers

Differential costs are $8 per unit. The correct answer is d.

Make-or-buy decisions involve determining whether to produce a product in-house or to purchase it from an external supplier. In this scenario, Waterway, Inc. is currently producing Part 15 at a cost of $14 per unit. In 2022, Oriole Company has offered to provide Part T5 for $11 per unit.

To determine whether Waterway should make or buy Part T5, the relevant costs should be compared. The relevant cost of making Part T5 is the incremental cost of producing it, which is the difference between the new cost of producing Part 15 ($19 per unit) and the old cost ($14 per unit). Therefore, the incremental cost of producing Part T5 is $5 per unit.

The relevant cost of buying Part T5 is the cost of purchasing it from Oriole Company ($11 per unit). The differential cost between the two options is the difference between the cost of making and the cost of buying, which is $8 per unit ($11 - $3). Therefore, the correct answer is d. Differential costs are $8 per unit.

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Question- You are the Minister and are considering a project
providing citizens with a service. It is common knowledge that the
demand for this service is given by P = 10 - Q, where P is the
price and

Answers

If the service has a constant marginal cost of $8, the optimal amount of service would be 2, as determined by equating the marginal cost and marginal benefit.

If the service has a constant marginal cost of $8, the optimal amount of service can be determined by equating the marginal cost to the marginal benefit.

The marginal benefit can be derived from the demand function:

MB = P = 10 - Q

Setting the marginal cost (MC) equal to the marginal benefit (MB), we have:

MC = MB

$8 = 10 - Q

Rearranging the equation, we find:

Q = 10 - $8

Q = 2

Therefore, the optimal amount of service, if the Deputy Minister's claim is accurate, would be 2.

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--The given question is incomplete, the complete question is given below " You are the Minister and are considering a project providing citizens with a service. It is common knowledge that the demand for this service is given by P = 10 - Q, where P is the price and Q is the amount/level of service used by citizens. 1. Your Deputy Minister claims this service has a constant marginal cost of $8. If you believe her, what would be the optimal amount of service?"--

how do you manage pasture land for Sheep, goats and chyangras ????explain!! any one know this answer then help meeee​

Answers

Answer:

Your pasture should be divided into small fields or blocks the more the better depending on the #of goats

Explanation:

Set up a schedule where you rotate the goats every day. Your first field should be the last one after the goats graze all the others fields.

Answer:

we can managed the pastureland for sheep,goats and chyangras by the following points:

1) local grasses should be conserved and promoted.

2) Rotational grazing should be practiced.

3) pastureland should be routinely irrigated during the dry season .

4) If it has poor soil fertility, fertilizers should be applied time to time.

5) Based on geographical conditions, various grasses can be planted on the pastureland.

under the controls section of the marketing plan, which area provides a detailed account of how the specific actions of the marketing plan will be carried out and who will be responsible for those activities?

Answers

Hence, the correct answer is implementation.

What exactly is a marketing plan?

A marketing plan is a detailed document or blueprint that covers the advertising and marketing efforts for the future year. It describes the business operations necessary to achieve specific marketing objectives within a defined time frame. A marketing plan also includes a description of a company's current marketing position, a discussion of the target market, and a description of the marketing mix that will be employed to achieve the company's marketing goals. A marketing plan has a formal framework, but it may be used as either a formal or informal document, making it highly versatile. It contains some historical data, prospective estimates, and approaches or plans for accomplishing marketing objectives.

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5. A number with the addition of itself becomes 38. What
is the number?

Answers

Answer:

19+19=38

...........................

To find the answer to this, just divide the given variable (38) by 2. Which is 19

In terms of SUPPLY, what factors have contributed to the fall in oil prices?

Answers

Current supply and output. Until recent years, Organization of Petroleum Exporting Countries (OPEC) often set supply through a quota system.

Why is a city planner an important career

Answers

Answer:

Being a city planner is a very important career since there work affects the city that they are working on. City planners create programs, plan out ways to develop land, plans to place buildings and features. Put in facilities, etc.

In your city, most of the buildings and places where are there neighborhoods. Are most likely the work of a team of city planners. It says it in its name. A city planner is a planner who uses there skills to plan out a city or plan out things in the city. The placements of certain museums or buildings are the result of a city planner.

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Tim Horton wants to raise funds to open a branch of their coffee shop in Trinidad. To raise the funds, Tim Horton would sell bonds 100 $1,000 par value with a coupon interest rate of 6%. The bonds would mature in 15 years and interest would be paid semi-annually. The required rate of return is expected to be 8%.

Requirement:
a) Calculate the value of one bond
b) What is the total amount Tim Horton would raise if all bonds were sold?

Answers

Answer:

a) The value of one bond is $837.08.

b) The total amount Tim Horton would raise if all bonds were sold is $83,708.

Explanation:

a) Calculate the value of one bond

This can be calculated as follows:

Annual coupon = Bond face value * Coupon interest rate = $1,000 * 6% = $60

Annual coupon discount factor = ((1 - (1 / (1 + r))^n) / r) .......... (1)

Where;

r = required semi-annual rate of return = required annual rate of return / number of semi-annual in a year = 8% / 2 = 0.08 / 2 = 0.04

n = number of semi-annuals = number of years * number of semi-annual in a year = 15 * 2 = 30

Substituting the values into equation (1), we have:

Semi-annual coupon discount factor = ((1-(1/(1 + 0.04))^30) / 0.04) = 17.2920333006645

Present value of coupon = ((Annual coupon / number of semi-annual in a year) * Semi-annual coupon discount factor) = (($60 / 2) * 17.2920333006645 = $528.76

Present value of the face value of the bond = Face value of the bond / (1 + r)^n = ($1,000 / (1 + 0.04)^30 = $308.32

Therefore, we have:

Bond value = Present value of coupon + Present value of the face value of the bond = $528.76 + $308.32 = $837.08

Therefore, the value of one bond is $837.08.

b) What is the total amount Tim Horton would raise if all bonds were sold?

Number of bonds expected to be sold = 100

Value of one bond = $837.08

Total amount that would be raised = Number of bonds expected to be sold * Value of one bond = 100 * $837.08 = $83,708

Therefore, the total amount Tim Horton would raise if all bonds were sold is $83,708.

what effect would an effective minimum wage have on a perfectly competitive market?

Answers

In a aggressive exertions marketplace, an boom within side the minimal salary reduces employment and will increase unemployment. A minimal salary may want to boom employment in a monopsony exertions marketplace on the equal time it will increase wages.

The required details for unemployment in given paragraph

The time period unemployment refers to a scenario in which someone actively searches for employment however is not able to locate paintings. Unemployment is taken into consideration to be a key degree of the fitness of the economy. The maximum regularly used degree of unemployment is the unemployment rate. It's calculated via way of means of dividing the wide variety of unemployed human beings via way of means of the wide variety of human beings within side the exertions force. Many governments provide unemployment coverage to sure unemployed people who meet eligibility requirements.

Unemployment is a key financial indicator as it alerts the ability (or inability) of employees to attain gainful paintings and make contributions to the efficient output of the economy. More unemployed employees suggest much less general financial production.

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combining various goods and services into a convenient grouping is called

Answers

The term that refers to combining various goods and services into a convenient grouping is called bundling.

This is the most popular and successful marketing strategy, especially for businesses that provide services.

By creating bundles, a company can not only enhance its profits but also improve customer satisfaction.The concept of bundling can also be seen in various sectors, including travel, telecommunications, finance, and software.

In the telecommunications industry, for example, a bundle may include television, phone, and internet services. Customers may be drawn to the bundle because it provides them with all of the services they require in one convenient package, as well as a discount over the cost of purchasing each service individually.

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Aggie Limo is considering upgrading their fleet of stretch limosines by adding a large flat screen TV. With the flat screen TV, they can charge more money enabling annual revenue for each limosine. There is also a small increase in annual cleaning costs. Flatscreen cost including installation: 1540
Additional annual revenue per car due to flat screen: 832 Additional annual cleaning cost due to flat screen: 148 What is the payback (in years)?

Answers

We must ascertain how long it will take for the additional money brought in by the flat-screen TV to offset the cost of installation and the rise in yearly maintenance expenses in order to calculate the payback period.

The flat screen TV's initial price, including installation, is $1540. The flat screen TV generates $832 more in annual revenue per car, while the higher annual cleaning expenses come out to $148. We divide the initial expense by the net yearly cash flow, which is the difference between the additional revenue and the additional cleaning expense, to determine the payback period: Initial cost x Net annual cash flow equals the payback time. Net annual cash flow is equal to additional revenue minus additional cleaning expenses ($832 minus $148 equals $684). Period of repayment = $1540 / $684 ≈ 2.25 years The addition of the flat-screen TV to the limousine fleet will therefore pay for itself in roughly 2.25 years.

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Francine and Shenell Inc. has an equity multiplier of 3.00. Determine the company's debt ratio. Select one: a. 52.48% b. 75.00% c. 36.36% d. 66.67% e. 63.64%

Answers

Francine and Shenell Inc. have a debt ratio of d) 66.67%. Therefore, the company's debt ratio is approximately 66.67%, which corresponds to option d) 66.67%.

The debt ratio is a financial ratio that represents the proportion of a company's total assets that are financed by debt. It is calculated by dividing the total debt by the total assets.

The equity multiplier is the reciprocal of the equity ratio and is calculated as:

Equity Multiplier = Total Assets / Total Equity

In this case, the equity multiplier is given as 3.00. To determine the debt ratio, we can use the following formula:

Debt Ratio = 1 - (1 / Equity Multiplier)

Plugging in the given equity multiplier:

Debt Ratio = 1 - (1 / 3.00)

Calculating:

Debt Ratio = 1 - 0.3333

Debt Ratio ≈ 0.6667

Converting to a percentage:

Debt Ratio ≈ 0.6667 * 100

Debt Ratio ≈ 66.67%

Therefore, the company's debt ratio is approximately 66.67%, which corresponds to option d) 66.67%.

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3. What is inflation?
O When asset and consumer prices continue to fall
O The measure of dollar value of all goods and services
O The measure of change in employment
O The continuous increase in the prices of most goods and services

Answers

D. the continuous increase in the prices of most goods and services
The answer is D because inflation is where something increases

Introduction Develop an introductory paragraph keeping in mind that research is important when choosing your Stock Market Game portfolio and investing successfully for your own future.

Answers

Equity purchasing and selling decisions are made by investors and traders utilizing stock analysis. Investors and traders can obtain an advantage in the markets and make wise judgments by analyzing and comparing historical and current data. It is crucial to do your research on the stock market before you invest.

What is Stock Market Game?

The Stock Market Game is a virtual recreation of the world's capital markets that introduces economics, investing, and personal finance to children in grades 4 through 12. It has helped approximately 20 million kids get ready for a future when they can support themselves financially.

By simulating the stock and bond markets, it introduces young people to investing and saving. Students get access to a $100,000 virtual financial portfolio that they can trade and manage.

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When preparing a segment margin income statement ______.

Answers


When preparing a segment margin income statement, one should look at the income statement for the individual business segment and determine the gross margin for that segment. This involves subtracting the cost of goods sold from the segment's sales to determine the gross margin. One should then subtract the other expenses associated with the segment to determine the net margin for that segment.



In order to complete this analysis, one should begin by gathering the necessary financial data. This would include the sales and cost of goods sold for each segment, as well as any other associated expenses. Once all of the information has been gathered, one should subtract the cost of goods sold from the segment’s sales to determine the gross margin. One should then subtract the other expenses associated with the segment to determine the net margin for that segment.


One should also take into account any one-time items that could impact the segment’s results. This includes items such as restructuring charges, acquisition costs, and write-offs. Once all of the items have been taken into account, one should be able to determine the segment’s margin. The segment margin income statement is a useful tool for analyzing the performance of an individual business segment. By taking into account all of the necessary financial data, one should be able to accurately determine the segment’s margin and make informed decisions about the performance of the segment.

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Describe at least four ways you can take money out of a checking account. (1-4 sentences. 2.0 points)

Answers

Answer:

write a check, use an ATM, fill out a withdrawal slip and take it into the bank


Which of the following are examples of limited resources on the part of consumers?
product and space
money and product
time and money
space and time

Answers

Answer:

The answer is time and money

Explanation:

I took the test on edge

Examples of limited resources on the part of consumers are time and money.

What are limited resources?

Limited resources are resources that can be depleted. They are of limited availability. As these resources are used, they decline.

For example, no one has an unlimited supply of money. As money is spent, the amount of money one has reduces. Also, time is limited. One has 24 hours in a day.

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The loan-to-value ratio for a condominium purchased for $265,000 with a down payment of $53,000 is?

Answers

The loan-to-value ratio for a condominium purchased for $265,000 with a down payment of $53,000 is 80%.

A loan is a loan of money by one or more individuals, entities, or other entities to another individual, entity, etc. Repayment amount of the principal borrowed.

A loan is a type of debt owed by an individual or other legal entity. A lender (usually a corporation, financial institution, or government) makes an advance payment to a borrower. In return, the borrower agrees to certain terms, including funding costs, interest, repayment dates, and other terms.

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In general, banks make profits by selling ________ liabilities and buying ________ assets.
a. short-term; longer-term
b. risky; risk-free
c. illiquid; liquid
d. long-term; shorter-term

Answers

In general, banks make profits by selling short term liabilities and buying long term assets.

Why are long-term assets crucial?

The company's overall fixed costs are heavily weighted toward long-term assets, which will be helpful going forward. Long-term asset information is crucial for accurate financial reporting, business assessment, and financial analysis of an organisation.

Are short-term liabilities a current liability?

Debts that a business must pay off within a typical operational cycle, typically less than a year, are referred to as current liabilities or short-term liabilities (as opposed to long-term liabilities, which are payable beyond 12 months).

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In general, banks make profits by selling short term liabilities and buying long term assets.

Why are long investments crucial?

The company's overall fastened prices are heavily weighted toward long assets, which can be useful going forward. Long plus data is crucial for correct monetary coverage, business assessment, and monetary analysis of an organisation.

Short-term debt is it a current liability?

Debts that a business should pay off inside a typical operational cycle, generally but a year, are said as current liabilities (sometimes termed short-run liabilities) (as hostile long liabilities, that are due on the far side twelve months).

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resource acquisition is initialization (raii) is a basic technique for resource management based on scope. the key idea behind raii is to

Answers

The key idea behind RAII is to tie the lifetime of a resource to the lifetime of an object by performing acquisition of the resource in the object's constructor, and releasing it in the object's destructor.

Resource Acquisition Is Initialization (RAII) is a programming technique that ensures that resources such as memory, file handles, network sockets, etc. are properly acquired and released in a C++ program. The basic idea behind RAII is to tie the lifetime of a resource to the lifetime of an object by performing acquisition of the resource in the object's constructor, and releasing it in the object's destructor.

The key idea behind RAII is to ensure that the resource is acquired and released in a well-defined manner, without relying on the programmer to manually manage the resource. By tying the resource management to the lifetime of an object, the programmer can ensure that the resource will be released in a timely and predictable manner, even in the presence of exceptions or other error conditions.

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You are considering taking out one of two loans. Loan R has a principal of $17,550, an interest rate of 5. 32% (compounded monthly), and a duration of seven years. Loan S has a principal of $15,925, an interest rate of 6. 07% (compounded monthly), and a duration of nine years. Assuming that you pay back each in monthly intervals, which loan will have a greater lifetime total, and how much greater will it be? Round all dollar values to the nearest cent. A. Loan S’s lifetime total will be $1,274. 12 greater than Loan R’s. B. Loan S’s lifetime total will be $32. 99 greater than Loan R’s. C. Loan R’s lifetime total will be $350. 88 greater than Loan S’s. D. Loan R’s lifetime total will be $58. 96 greater than Loan S’s.

Answers

The difference between the monthly payment of R and S is equal to $48.53 by following the compound interest formula. Thus, Loan R's monthly loan amount is greater than Loan S.

What is a Compound interest loan?

Combined interest (or compound interest) is the loan interest or deposit calculated based on both the original interest and accrued interest from earlier periods.

\(\rm\,For\,R\\\\P = \$\,17,550\\r\,= 5.32\%\\Time\,= n= 7\,years\\Amount\,paid= [P(1+\dfrac{r}{100\times12})^{n\times12} ]\\=[ 17,550 (1+\dfrac{5.32}{100\times12})^{7\times12} ]\\= [ 17,550 (\dfrac{12.0532}{12})^{84} ]\\\\= [ 17,550 (1.00443^{84} ]\\\\= \$ 25,440.48\\\\Total\,monthly\,payment = \rm\,\dfrac{25,440.48}{84}\\\\= \$\, $302.86\\\\\)

\(\rm\,For\,S =\\\\P=\,\$ 15,925\\r\,= 6.07\%\\T=n= 9\,years\\\\Amount\,paid\,= [P(1+\dfrac{r}{100\times12})^{n\times12} ]\\\\\= [15,925(1+\dfrac{0.0607}{12})^{9\times12} ]\\\\\\= [15,925(1+\dfrac{0.0607}{12})^{108} ]\\\\=[15,925(1.7247.84)} ]\\\\\= \$27,467.19\\\\Total\,monthly\,payment =\dfrac{\rm\,\$\,27,469.19}{108}\\\\= \$ 254.326\\\\\)

The difference between the monthly payment of R and S is equal to $48.53.

Hence, Loan R's monthly payment is greater than the loan's monthly payment by $48.53

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true or false? when martin shrkeli bought the rights to a drug and raised the price from $13.50 to $750, the department of justice filed a lawsuit and ultimately imprisoned him for predatory pricing.

Answers

When Martin Shkreli bought the rights to a drug and raised the price from $13.50 to $750, the Department of Justice filed a lawsuit and ultimately imprisoned him for predatory pricing.

False. Explanation: Martin Shkreli is an American businessman and former hedge fund manager. He is also known as the "Pharma Bro" and is notorious for raising the price of Daraprim by more than 5,000 percent. Daraprim is a drug used to treat parasitic infections.

Shkreli’s company, Turing Pharmaceuticals, purchased the rights to Daraprim in August 2015 and then increased the price of the drug from $13.50 to $750 per pill. This caused widespread outrage and led to him being called the “most hated man in America”.While the Department of Justice did investigate Shkreli, he was ultimately imprisoned not for predatory pricing but for securities fraud related to his hedge fund activities. In 2017, he was found guilty of three counts of securities fraud and sentenced to seven years in prison.

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why do business need funding

Answers

To start up the company. The business would also sell their company’s stocks which is a small percent of the money coming in.

True or False: Generally, companies with higher EPS growth rates tend to have higher Price to Earnings ratios. Group of answer choices True False

Answers

Answer:

true

Explanation:

using data to demonstrate the connections between implemented hr practices and agency performance is

Answers

Using data to demonstrate connections between implemented HR practices and agency performance is referred to as "HR analytics".

The HR analytics involves collecting, analyzing, and interpreting data related to HR practices, employee behavior, and organizational performance to gain insights and make data-driven decisions.

By examining the data, organizations can identify correlations, trends, and patterns that help establish the impact of specific HR practices on agency performance.

This approach enables organizations to measure the effectiveness of their HR strategies, identify areas for improvement, and make informed decisions to optimize HR practices and ultimately enhance agency performance.

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The given question is incomplete, the complete question is

Using data to demonstrate the connections between implemented hr practices and agency performance is called as ?

How important is money

Answers

Answer:

very important

Explanation:

money is a global income source for everyone. we all have different types but it is all still money. now say one country got rid of money and had people pay for stuff using other things. if china did that lots of different countries wouldn't be able to get stuff from there unless they had so much of that product they could just give it up.

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