BCD Company offer its investors option contracts to buy their shares at a price of P50. Currently, the value of their stocks in the market stands at P60. The 52-week high of the share price is P83 and its 52-week low is P47. The treasury bill issued by the government yields 8.25% currently. What’s the probability for the up move?
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BCD Company offer its investors option contracts to buy their shares at a price of P50. Currently, the value of their stocks in the market stands at P60. The 52-week high of the share price is P83 and its 52-week low is P47. The treasury bill issued by the government yields 8.25% currently. What’s the probability for the up move?
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- Nanno Company offers its investors option contracts to buy their shares at a price of P50. Currently, the value of their stocks in the market stands at P60. The 52-week high of the share price is P83 and its 52-week low is P47. The treasury bill issued by the government yields 8.25% currently. REQUIRED: What’s the probability for the up move? What’s the probability for the down move? How much is the total option pay off for the stock? What should be the reasonable price of the option contracts of the company?The company offered its investors option contracts to buy their shares at P72 with the current price of P90. They were only given 90 days to exercise their rights. 52 week-high for the stock is P95 while the 52-week low is P70. The T-bill rate is 7.32%. 1. What is the value of Nd1 and Nd2? (Use 4 decimal places) 2. What is the volatility rate? (Use percentage and at least, two decimal places) 3. What is the value of the call option and put options? (Use two decimal places)FinTrade has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 800 shares of stock in one year. The T-bill rate is 8% per year. Required: If Brandex stock now sells at $180 per share, what should the futures price be? If the Brandex price drops by 6%, what will be the change in the futures price and the change in the investor’s margin account? If the margin on the contract is $13,900, what is the percentage return on the investor’s position?
- OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 1,000 shares of stock in 1 year. The T-bill rate is 6% per year.a. If Brandex stock now sells at $120 per share, what should the futures price be?b. If the Brandex price drops by 3%, what will be the change in the futures price and the change in the investor’s margin account?c. If the margin on the contract is $12,000, what is the percentage return on the investor’s position?The company offered its investors option contracts to buy their shares at P72 with the current price of P90. They were only given 90 days to exercise their rights. 52 week-high for the stock is P95 while the 52-week low is P70. The T-bill rate is 7.32%. REQUIRED: Value of Nd1. (Use 4 decimal places) Value of Nd2. (Use 4 decimal places) Volatility rate. (Use percentage and at least, two decimal places) Value of the call option. (Use two decimal places) Value of the put options. (Use two decimal places)You would like to be holding a protective put position on the stock of XYZ Company to lock in a guaranteed minimum value of $105 at year-end. XYZ currently sells for $105. Over the next year, the stock price will increase by 9% or decrease by 9%. The T-bill rate is 7%. Unfortunately, no put options are traded on XYZ Company. Required: Suppose the desired put option were traded. How much would it cost to purchase? What would have been the cost of the protective put portfolio? What portfolio position in stock and T-bills will ensure you a payoff equal to the payoff that would be provided by a protective put with X = 105? Show that the payoff to this portfolio and the cost of establishing the portfolio match those of the desired protective put.
- AAPL is currently trading for $95 per share. The stock pays no dividends. A one-year European put option on AAPL with a strike price of $90 is currently trading for $7.60. If the risk-free interest rate is 2% per year, then the price of a one-year European call option on AAPL with a strike price of $90 will be closest to:Bank of America (BAC) is currently trading for $15 per share. The stock pays no dividends. A one-year European call option on BAC with a strike price of $16 is currently trading for $1.25. If the risk-free interest rate is 2% per year, then the price of a one-year European put option on BAC with a strike price of $16 will be closest to: $1.94 $1.25 $0.98 $2.25Company NMN is selling for $100 dollars per share, and does not pay any dividends. A call option on this stock with one month until expiration and an exercise price of $110 sells for $9 while a put with the same strike price and expiration sells for $18.97. What is the annual yield on risk-free zero-coupon bonds in this economy (to the nearest %)? [hint: you need to use the put-call parity].
- One of the options is Delta Airlines. They have paid an annual divendend of $3.98 for the past 25 years and we expect them to continue this indefinetly. Assuming the market requires a(n) 12.0% return Delta, what is the value of a share of stock? (Answer with 2 decimals.) And what if we assumed they would start increasing their divendend by 2.5% per year? What would be a fair price in that scenario? (Answer with 2 decimals.)One of the categories of options available to investors and speculators is LEPOs. Assuming 7.00 per cent margin, what would be the percentage return and dollar profit to an investor who purchased one LEPO (for 1000 shares) for a premium of $26 220 and later closed out the position when the LEPO premium was $28 430?ABC stock is currently trading at R70 per share. A dividend of R1 is expected after three monthsand another one of R1 after six months. A European call option on ABC stock has a strike priceof R65 and 8 months to maturity. Given that the risk-free rate is 10% and the volatility is 32%,compute the price of the option.