At-the-money 3-month call and put are sold at $2 and $1.8 respectively. If the underlying stock sells at 10 $/share, find the annual risk-free interest rate. Use discrete discounting if need be. Group of answer choices:
A. 8.16%
B. 8.42%
C. 4.08%
D. 2.04%
Answers
Here is the solution to your problem.It is given that the at-the-money 3-month call and put are sold at $2 and $1.8 respectively and the underlying stock sells at $10/share.Let us now assume that the call and put prices are C and P respectively.
Thus, the call price is $2 and the put price is $1.8. If we assume the exercise price of the call and put options to be $10, then both are at-the-money options.The sum of call and put prices is given as $2 + $1.8 = $3.8. The current market price of the stock is given as $10/share.Thus, the sum of the call and put option prices should be equal to the current stock price multiplied by a discount factor. Therefore, we can say that S = 3.8e-rT. Here, T = 0.25 (3 months/12 months) and S = 10.Substituting these values in the above equation, we have 10 = 3.8e-r(0.25).Solving this equation, we get r = 8.16%.Thus, the annual risk-free interest rate is 8.16%. Therefore, option (A) is correct.
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Related Questions
Marginal analysis helps a firm determine the
Answers
Answer:
Marginal analysis is really important for a firm. Marginal analysis helps a firm to determine the most equitable allocation of a firm's resources.
Explanation:
The Dow Jones Industrial Average (DJIA) is a price-weighted index of common stocks consisting of 30 large, well-established U.S. companies. The S&P 500 is a value-weighted index of common stocks consisting of the 500 largest U.S. publicly-traded companies.
True or False
Answers
The Dow Jones Industrial Average (DJIA) is a price-weighted index of common stocks consisting of 30 large, well-established U.S. companies while the S&P 500 is a value-weighted index of common stocks consisting of the 500 largest U.S. publicly-traded companies. The statement is True.The Dow Jones Industrial Average (DJIA) is a price-weighted index of 30 U.S. blue-chip companies that are mainly industrial and consumer service providers. The DJIA is among the most notable stock market indexes in the world and is a significant way to measure U.S. stock market movements.The DJIA is made up of 30 big businesses with a long history of good performance, such as Coca-Cola, General Electric, McDonald's, and Walmart. The DJIA is calculated by adding up the rates of the 30 stocks in the index and dividing the sum by a divisor. The divisor is adjusted to preserve historical continuity while accounting for any stock splits, dividends, or other changes.The DJIA's purpose is to provide a snapshot of the total stock market's performance and to represent how certain firms in specific industries are performing. It gives a sense of the current state of the U.S. economy and is used as a reference for many different financial products, such as mutual funds, derivatives, and exchange-traded funds (ETFs).Standard & Poor's 500 (S&P 500)The Standard & Poor's 500, often abbreviated as the S&P 500, is a market capitalization-weighted index of 500 of the biggest publicly traded companies in the United States. The S&P 500 is a more precise indicator of the American stock market's overall performance than the DJIA since it includes a greater number of firms in various sectors. The S&P 500 reflects about 80% of the total stock market's overall market capitalization.The S&P 500 is divided into 11 sectors, such as healthcare, information technology, consumer staples, and energy. The S&P 500's goal is to provide a broad representation of the U.S. economy by reflecting how well the country's most significant businesses are doing. The S&P 500 is a benchmark index for financial instruments such as mutual funds, ETFs, and derivatives.
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The statement "The Dow Jones Industrial Average (DJIA) is a price-weighted index of common stocks consisting of 30 large, well-established U.S. companies. The S&P 500 is a value-weighted index of common stocks consisting of the 500 largest U.S. publicly-traded companies" is true.
DJIA is one of the oldest and most commonly cited benchmarks for the U.S. stock market. It is one of the most popularly used stock market indices along with the S&P 500 and NASDAQ. DJIA is a price-weighted index, which means that the index's price is calculated by dividing the sum of the prices of its 30 constituent stocks by a divisor.
The Standard & Poor's 500, commonly known as the S&P 500, is an American stock market index consisting of the 500 largest publicly-traded companies in the U.S. The S&P 500 is widely regarded as the best indicator of large-cap U.S. equities. It is a value-weighted index, meaning that the stocks in the index are weighted based on their market capitalizations, or the total value of the company's outstanding shares. The S&P 500's calculations are based on the stock prices of the 500 companies included in the index.
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A firm sells its output in a perfectly competitive market and hires two inputs, capital and labor, in perfectly competitive factor markets. The product price is $15 per unit, the wage is $75 per day, and the marginal product of capital is 3. If the firm is choosing the least-cost combination of labor and capital, the firm's marginal product of labor and the price of capital must be equal to which of the following?
Marginal Product of Labor Price of Capital
(A) 25 $5
(B) $25 $45
(C) $5 $15
(D) 5 25
(E) 5 45
Answers
The answer is option (B) $25 $45.The marginal product of labor (MPL) is the extra output produced by hiring one additional unit of labor, and the marginal product of capital (MPK) is the extra output produced by adding one more unit of capital.
In the short run, a company's production depends on the quantity of capital and labor that it employs.Therefore, when the company is selecting the least-cost combination of labor and capital, it must do so in such a way that the cost of the marginal product of capital (MPC) equals the cost of the marginal product of labor (MPL).Now let's determine if this company is operating at the lowest possible cost.
The MPK is given as 3, and since the price of capital equals the marginal product of capital, it is equal to 3. MPL is unknown, so we'll need to figure it out.To determine the MPL, we'll utilize the following formula:MPL = change in Q / change in L, where Q is the output and L is the labor force.The cost of labor is $75, and the price of goods is $15. Using this information, the firm's least-cost output production will have an MPL of 5 and a price of capital of $45. Thus, the answer is option (B) $25 $45.
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the predecessor auditor for a public company, who is satisfied after properly communicating with the successor auditor, has reissued a report because the audit client desires comparative financial statements. the predecessor auditor's report should make
Answers
The predecessor auditor should modify the original report to include the appropriate language related to the comparative financial statements.
The predecessor auditor should not reissue the original report because it no longer represents the current state of the financial statements. Instead, the predecessor auditor should issue a new report that includes all necessary information related to the comparative financial statements.
The predecessor auditor should also consider any new information that has come to their attention since the original report was issued, and ensure that the new report reflects the current state of the financial statements.
Additionally, the predecessor auditor should communicate any relevant information to the successor auditor to ensure a smooth transition and to enable the successor auditor to perform an effective audit.
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When making decisions, managers often must decide between doing what is beneficial for the firm in the short term, and what is beneficial for both the firm and society in the long term. To address this conflict, a firm must
Answers
When making decisions, managers are often faced with a conflict between what is beneficial for the firm in the short-term and what is beneficial for both the firm and society in the long-term.
This conflict arises because the actions that benefit the firm in the short-term may not necessarily align with the interests of society as a whole, which can lead to negative consequences for both the company and society in the long-term.
To address this conflict, a firm must adopt a long-term orientation and consider the broader social and environmental impacts of its decisions. This means looking beyond immediate financial gains and recognizing that actions taken today can have far-reaching implications for the company's reputation, customer loyalty, employee morale, and overall sustainability.
Firms that prioritize social responsibility and sustainable business practices are more likely to build strong relationships with stakeholders, including customers, employees, investors, and regulators. They are also better equipped to weather economic downturns and other disruptions, as they have diversified their risk and invested in building resilient supply chains and communities.
Ultimately, the key to addressing the conflict between short-term gains and long-term benefits is a commitment to corporate social responsibility (CSR) and sustainable business practices. By prioritizing the needs of society and the environment alongside those of shareholders, firms can create value for all stakeholders over the long-term, ensuring their continued success and impact.
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Peyton earns $1,700 every other week, but only brings home $1,100 due to deductions, what is Peyton’s gross pay?
Answers
? Question
Select the correct answer from each drop-down menu.
Complete the sentences by applying your knowledge of economic concepts to the video you watched.
Through the Recovery Act, the federal government transferred money to
develop local projects to increase employment and output.
In Fresno, stimulus money was used to assist
businesses and keep them open.
which could then
Answers
Answer:
local governments
small
Explanation:
PLATO
What is a disadvantage of using a checking account instead of other types of
accounts?
A. You will likely not have federal protection for your money.
B. You will pay a fee if you make too many transactions.
C. You will generally not receive interest.
D. You will pay a penalty if you withdraw your money.
Answers
Answer:
you will generally not receive interest
Explanation:
took the quiz
Sales, purchasing, and shipping documents are all considered examples of to an accounting system.
a. True
b. False
Answers
Sales, purchasing, and shipping documents are all considered examples of to an accounting system.
The above statement is True.
What do you mean by sale?
In a contract for the sale of goods, the seller transfers or promises to transfer the buyer's ownership of the products in exchange for payment, or the price. There could be a sale agreement between two co-owners. A selling agreement may be either unconditional or conditional.You might have an apple orchard with apples, for instance. You consent to selling a buyer 1000 apples once they are ripe. Although the sale of these commodities must take place in the future, the agreement has already been reached and the goods have been identified.To know more about Sale here
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Which of the following must be
certified by the FAA to be hired at
airports?
A. Air-traffic controllers
B. CB radio operators
C. Police Dispatchers
Answers
That will be Air - traffic controllers
mark brainliest pls
which of the following is true about FBLA-PBL?
A. There are thousands of chapters
B. joining replaces the need to attend college
C. the organization doesn't host any events
D only middle school students can join
Answers
Answer:there are thousands of chapters.
Explanation:
it’s the only answer that makes sense.
Your new health insurance has a $4,000 deductible. What does that mean?
You'll pay the insurance company $4,000 a year to cover all of your
medical expenses.
B
Your insurance will cover up to $4,000 of your medical expenses each
year and then you'll have to cover the rest.
с
You'll need to pay $4,000 on medical expenses each year before your
insurance will kick in
Your insurance will pay up to $4,000 for each medical visit you have.
Answers
Answer:
с). You'll need to pay $4,000 on medical expenses each year before your
insurance will kick in
Explanation:
The deductible is the cash amount that a person needs to pay to the insurance company before their insurance coverage can begin. It applies mostly to medical insurance. If an insurance policy has a deductible requirement, one can not launch any claim without having paid the deductible in full. The insured pays the deductible out of pocket.
. In 2000, KFC® and A&W® restaurants successfully merged because each had a strong
signature product: KFC’s fried chicken and A&W’s root beer floats.
Branding strategy used:
Answers
Explanation:
Co-branding is a form of branding that connects companies together. Essentially, co-branding is a marketing partnership between two or more businesses.
Look at the equation framework.
3 empty boxes show the parts of an equation. The first box = the second box minus the third box.
Which of the following lists the proper placement of terms, from left to right, to complete the equation?
revenue, profit, opportunity cost
profit, revenue, production cost
production cost, profit, revenue
opportunity cost, revenue, profit
Answers
Answer:
profit, revenue, production cost
Explanation:
Profit is the rewards or gains realized for engaging in business activities. A business is profitable when revenue is more than the expenses.
Revenue is the income generated from the normal business activities of selling goods and services.
Production costs are the expenses incurred in making goods meant for sale.
Answer:
B
or
profit, revenue, production cost
Explanation:
Which of the following is a benefit of EFT
A. Limited access
B. Accessibility
C. Difficulty
D. Cost
Answers
Answer:
cost hope this helps and maybe brainliest
some partners in a partnership may have different rights, privileges, and responsibilities than other partners.
Answers
The partnership for the business specifies the rights of a partnership's partners. Any group comprising two or more people who have decided to start a business together is considered a partnership.
What are a partnership's benefits and drawbacks?Advantages: Disadvantages: A partnership firm is simple to establish because only the most basic legal procedures are necessary. Partnership businesses have uncapped liability, which affects the partners' financial assets.
Limited partnerships: what are they?Similar to a partnership agreement, a limited partner (LP) must include at least one small partner (GP) and at least one restricted partner, as opposed to the minimum requirement of two GPs for general partnerships.
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A fan base is, in most ways, quite similar to a customer base.
A. False
B. True
Answers
hi i need help plz its
Answers
What is the best way to respond to a customer complaint? A. Listen to the customer, B. Overcompensate C. Ignore the customer. D. Respond aggressively.
Answers
Answer:
a
Explanation:
u should never let the customer know that they are wrong
The best way to respond to a customer complaint is listen to the customer. It comes under the consumer protection management. The correct option is (A).
What do you mean by Customer Complain?Customer complaints relate to when a firm does not deliver on its commitment and does not satisfy customer expectations in terms of the product or services. Every business's customers are its most important component.
Customer complaints provide your team the chance to engage in open dialogue with your clients.
These exchanges might make your clients feel like they are essential to your success.
Customer complaints give you important information about how well-trained your front-line staff is and how to make improvements.
Therefore, the best way to respond to a customer complaint is listen to the customer. It comes under the consumer protection management.
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the process of creating a profile of your ideal customer for the purposes of developing a marketing strategy is known as what?
Answers
The process of creating a profile of your ideal customer for the purposes of developing a marketing strategy is known as buyer persona.
What are buyer personas and why are they significant?A buyer persona is a fictionalised portrayal of your ideal client. It is based on market analysis, actual customer data, and a few (informed) assumptions. It assists you in comprehending and connecting with the audience you wish to promote your goods and services to.
What is a buyer persona's principal goal?By arranging your data in a way that humanizes your clients, you may make it simpler for your team to comprehend their decision-making process, identify their pain points, and provide pertinent answers.
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2
Select the correct answer from the drop-down menu.
Which type of college credit program does the statement describe?
The
✓program is one of the more common ways to get college credit in high school. It includes an exam
that you must take at the end of the course.
Answers
Explanation:
The
✓program is one of the more common ways to get college credit in high school.
After graduating from AUD, Salman plans to start a book publishing company in Media City. He did some research and found that the printer would cost Dh220,000. He estimated that the variable cost per book is Dh170, and the selling price is Dh390. a. How many books must he sell to break even? Also, calculate the breakeven in dirham. b. In addition to the abovementioned costs, if he wants to pay himself a salary of Dh15,400 per year, what is her breakeven point in units and dollars? c. In the first thribe months of his business, he sold 400 books. Suddenly the printer breaks down. He spent Dh 25000 to fix the printer. In addition to 400 books sold, how many more books should she sell to break even? Assume that this part of the question is independent and she does not draw any salary
Answers
a. Salman needs to sell 637 books to break even, which would result in a breakeven point of Dh220,000.
What is the breakeven point for Salman's book publishing company in terms of units and dirham?To calculate the breakeven point, we use the formula:
Breakeven Point (in units) = Fixed Costs / (Selling Price per unit - Variable Cost per unit)
Given that the printer cost Dh220,000, the variable cost per book is Dh170, and the selling price is Dh390, we can substitute these values into the formula:
Breakeven Point (in units) = 220,000 / (390 - 170) = 637 books
The breakeven point in dirham is the total fixed costs, which is Dh220,000.
b. If Salman wants to pay himself a salary of Dh15,400 per year, we need to include this additional cost in the breakeven calculation.
To calculate the new breakeven point, we modify the formula:
Breakeven Point (in units) = (Fixed Costs + Salary) / (Selling Price per unit - Variable Cost per unit)
Adding the salary of Dh15,400 to the fixed costs, the new formula becomes:
Breakeven Point (in units) = (220,000 + 15,400) / (390 - 170) = 652 books
The breakeven point in dollars remains the same, which is Dh220,000.
c. After selling 400 books, Salman incurred a repair cost of Dh25,000 for the printer. To determine the number of additional books he needs to sell to break even, we need to consider the repair cost as an additional fixed cost.
First, we calculate the new fixed costs:
New Fixed Costs = Fixed Costs + Repair Cost = 220,000 + 25,000 = Dh245,000
Next, we use the formula to calculate the breakeven point:
Breakeven Point (in units) = New Fixed Costs / (Selling Price per unit - Variable Cost per unit)
Substituting the values into the formula:
Breakeven Point (in units) = 245,000 / (390 - 170) = 882 books
Therefore, Salman needs to sell an additional 882 - 400 = 482 books to break even, assuming he doesn't draw any salary.
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In 20X8, the first year of its operation, Fruit Farm Ltd had an apple plantation with a fair value of $131324.
The plantation is intended to be used for more than 1 period, solely for the purpose of growing apples. The company has no intention to sell the plantation beyond incidental scrap sales.
Between May and October 20X8, a total of $738 was spent on fertiliser treatments.
During December 20X8, 120 kg of apples were harvested at a cost of $8937. The net market value of the apple harvested was $35095 and the estimated selling costs were $5018.
By 31 December 20X8, 80% of the harvested apples had been sold for $37134 and actual selling costs of $3195 has been incurred.
On 31 December 20X8, the fair value of Fruit Farm Ltd's plantation was $231635.
Fruit Farm Ltd has a December 31 financial year end, and it adopts fair value as the accounting policy for their property, plant and equipment assets.
Calculate the net profit/(loss) for the year's income statement.
The correct answer is 30279. I would like to know the calculation details
Answers
Based on the information, the net profit for the year's income statement for Fruit Farm Ltd is $124,575.
How to calculate the profitRevenue from sold apples: $37,134.
Less: Actual selling costs: $3,195.
Gross profit from apple sales: $37,134 - $3,195 = $33,939.
Fair value at the end of the year: $231,635.
Fair value at the beginning of the year: $131,324.
Change in fair value: $231,635 - $131,324 = $100,311.
Total expenses: Fertilizer treatments expenses: $738.
Cost of apples harvested: $8,937.
Net profit/(loss) for the year:
Gross profit from apple sales: $33,939.
Change in fair value of the apple plantation: $100,311.
Total expenses: $738 + $8,937 = $9,675.
Net profit/(loss) = Gross profit + Change in fair value - Total expenses
= $33,939 + $100,311 - $9,675
= $124,575.
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Tracking a website you visit and compiling information could be an example of _____.
Answers
Answer:
ISP
Explanation:
Internet Service Providers (ISPs) can see everything you do online. They can track things like which websites you visit, how long you spend on them, the content you watch, the device you're using, and your geographic location.
Unearned revenue, an operating liability, arises when a company receives cash before any goods are delivered or services are rendered.
a. true
b. false
Answers
Answer is true.
Unearned income is the money received by a person or the business for the service or the product that has yet to be produced or to be delivered. It is a "prepayment" for the products or the services that a person or the corporation is anticipated to provide to the buyer at certain later period. As a result of this prepayment, the seller owes the income collected until the commodity or service is delivered. This liability is classified as current since it is likely to be settled within a year.
Receiving payments early benefits a firm since it boosts cash flow, which can be used for a number of corporate activities.
Therefore, the statement given is true.
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Grey wants to evaluate the outcome for all stakeholders to inform his decision making. Grey first should consider:.
Answers
Grey first should consider who the stakeholders are.
What is a decision-making process?
In any business or organization, the decision-making process is the process that helps the business to make well-informed choices through the process of:
Identification of the problemsGathering information for the solution to the problemEvaluating alternative resolution.For Grey to be able to evaluate the outcome for all the stakeholders to inform his decision making;
Grey first should consider who the stakeholders are to determine the legal and ethical issues related to implementing his compliance policy.Learn more about the decision-making process here:
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what document assists provider offices with the development of compliance manuals? a. oig internal compliance plan b. oig work plan c. oig investigation plan d. oig compliance program guidance
Answers
OIG Compliance Plan Guidance assists provider offices with the development of compliance manuals.
Adhering to local, state, and federal rules and regulations in the workplace are known as compliance. Regardless of size, all firms are required to follow compliance rules. Additionally, they must adhere to particular requirements for worker safety, data privacy, and data security.
Following internal rules and processes that are compliant with state law is the goal of compliance. By putting compliance procedures into place, a business may reduce the risk to its reputation, advance its mission and values, and stop and identify infractions.
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Many performers, like singers, actors, and athletes, get paid large amounts of money. Do you think they earn these amounts or should they get paid less? Why?
Answers
Answer:
They deserve that amount of money, they have worked hard to earn that sum of money.
Answer:
no they work for what they have and they work there way to where they are because not everyone can wakeup and be a D-1 football player or a singer those things take time, effort, determination to not give up, and etc. So with all this i think they get payed for what they earn becuase not all singers actors and althletes make the same amount of money!
Explanation:
if you buy a $10,000 U.S. Treasury bond ('T note') with a 2.5% coupon rate that pays semi-annually, what will be your yield after the first six months? what will your par value be when it matures?
Answers
Answer: The U.S. Treasury Series I Savings Bonds are 30-year instruments whose interest rate is reset every six months and are a way to help protect one from inflation. The rate is a combination of an inflation calculation over a six-month timeframe and a fixed rate determined by the Treasury Secretary. With inflation increasing this year to multi-decade highs, the inflation calculation for I Bonds bought until April 30, 2022, pay 7.12% for six months.
Explanation: i hope this helps :)
Select the type of job best demonstrated in each example. Frank is an Actor. His pay varies depending on how many hours he works each week. Susan works forty hours per week as a Reporter. Todd is a Telecommunications Equipment Repairer who works twenty hours per week. Latoya has a retirement account through the movie studio that employs her as a Film Editor.
Answers
Answer:here’s the answer for this question
Explanation:edge2023
The kind of the job demonstrated in each example are as follows:-
full time jobsalaried jobentry-level jobjob with benefitsWhat is an actor's job?Actors express ideas and portray characters in theater, film, television, and other performing arts media. They interpret a writer's script to entertain or inform an audience.
A full-time employment usually has a predetermined work week, with eight-hour days and forty-hour weeks. Working fewer than 35 hours a week is considered part-time. However, there are no hard and fast laws about the amount of hours.
Entry-level positions are available to everyone and do not require considerable professional experience or a degree.
Therefore, Employee benefits are any perks or remuneration given to employees in addition to their regular salary and earnings.
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