At the moment, a stock is trading at $515. January call options with a $100 strike sell for $16, while January put options with a $800 strike sell for $5. Calculate the interest rate on a risk-free bond.
Q: You observe the following prices for Treasury securities (per $100 of par value): Maturity…
A: 6 month rate = 100/99.01 - 1 = 1% 100.99 = 1.75/1.01 + 101.75/(1+r) r or one year rate = 2.5%
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At the moment, a stock is trading at $515. January call options with a $100 strike sell for $16, while January put options with a $800 strike sell for $5. Calculate the interest rate on a risk-free bond.
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- A stock currently trades for $115. January call options with a strike price of $100 sell for $16, and January put options a strike price of $100 sell for $5. Estimate the price of a risk-free bond.Suppose that today’s date is April 15. A bond with a 8% coupon paid semiannually every January 15 and July 15 is quoted as selling at an ask price of 101.0938 percent of par. If you buy the bond from a dealer today, what price will you pay for it? (Round your answer to 2 decimal places.) invoice price?It is April 5, 2023. The price of a Treasury Bond with a 5% coupon that matures on June 10, 2026 is quoted as 101-06. What is the cash price of the bond ( per $100 Par)
- A $18,000 face value bond matures on August 3, 2024, and carries a coupon of 6.55%. It is sold on February 3, 2009, for $20,557.32. Determine the yield to maturity?Suppose the following bond quotes for IOU Corporation appear in the financial page of today’s newspaper. Assume the bond has a face value of $2,000 and the current date is April 19, 2018. Company (Ticker) Coupon Maturity Last Price Last Yield EST Vol (000s) IOU (IOU) 6.3 Apr 19, 2034 112.97 ?? 1,857 a. What is the yield to maturity of the bond?Suppose a seven-year, $1,000 bond with a 11.53% coupon rate and semiannual coupons is trading with a yield to maturity of 9.06%. Is this bond currently trading at a discount, at par, or at a premuim? Explain. The bond is currently trading... (Select the best choice below.) A.... at a discount because the coupon rate is greater than the yield to maturity B.... at a premium because the yield to maturity is greater than the coupon rate C.... at par because the coupon rate is equal to the yield to maturity D.... at a premium because the coupon rate is greater than the yield to maturity 2. If the yield to maturity of the bond rises to 9.85% (APR with semiannual compounding), at what price will the bond trade?
- The price of Stock Y, which is currently $80, can go to $120, $90, or $60 in 6 months’ time. Security A pays $1 if the price of Stock Y in 6 months is $120, and zero otherwise. Security B pays $1 if the price of Stock Y in 6 months is $90, and zero otherwise. Security C pays $1 if the price of Stock Y in 6 months is $60, and zero otherwise. The prices of these securities are ??, ??, and ??, respectively. The discretely compounded risk-free interest rate is 5% per half-year (not annualized). When answering the questions below, explain your calculations. i. In the absence of arbitrage, what is the total cost of purchasing one unit each of securities A, B, and C? ii. If ?? = 0.2/1.05 ≈ 0.190476, what is the value of a 6-month European call on Stock Y with an exercise price of $75Your company sold call options on a stock. The option expires in 6 months, the risk-free rate is 6%, and the strike price is $50. The stock is currently trading at $52 dollars and has a volatility of 35%. How many shares of stock should you own in your hedging portfolio per call option sold?A coupon bond that pays semiannual interest is reported in the Wall Street Journal as having an ask price of 119% of its $1,000 par value. If the last interest payment was made 86 days ago, and this interest period has 183 days, and the coupon rate is 4.7%, what is the invoice price of the bond?
- Suppose that today’s date is April 15. A bond with a 10% coupon paid semiannually every January 15 and July 15 is quoted as selling at an ask price of 101.25. If you buy the bond from a dealer today, what price will you pay for it?Suppose the following bond quote for IOU Corporation appears in the financial page of today’s newspaper. Assume the bond has a face value of $1,000, and the current date is April 19, 2022. Company (Ticker) Coupon Maturity Last Price Last Yield Estimated Volume (000s) IOU (IOU) 6.85 April 19, 2036 92.741 ?? 73 What is the yield to maturity of the bond? What is the current yield? You purchase a bond with a coupon rate of 7.6 percent, a par value of $1,000, and a clean price of $910. If the next semiannual coupon payment is due in five months, what is the invoice price? Five Star Corporation will pay a dividend of $4.15 per share next year. The company pledges to increase its dividend by 6.25 percent per year, indefinitely. If you require a return of 9 percent on your investment, how much will you pay for the company’s stock today? Fegley, Incorporated, has an issue of preferred stock outstanding that pays a $5.90 dividend every year, in…You are given the following information about a bond: it is a $1,000 par value, newly issued 15- year semiannual bond with a coupon rate of 7%. The current trading price of the bond is $913. Of the following four choices, which one is the YTM of the bond?