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What’s the probability for the down 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?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)
- Mazzi Corp. shares are currently trading at RM14.00 each. A three-month put option on this share is priced RM0.50 at a strike price of RM15.00. The risk free interest is 10% per annum for all maturities. Observing this data, identify and calculate what are the arbitrage opportunities available. J-Rata Corp can supply 50,000 metric tons (MT) of crude palm oil (CPO) to L-Brothers on 15th March 2021. The current CPO price is RM3400 per MT. It is expected that the CPO could be trading at RM2700 per MT on 15th March 2021. The FCPO (CPO Futures) is currently trading at RM3450 per MT. Each FCPO contract is 25 MTs. If the FCPO is trading at RM2100 per MT on 15th March 2021, calculate the net sales revenue of J-Rata Corp in this supply transaction if it decides to hedge by using FCPO contracts. J-Rata Corp shares are currently trading at $30 each. It is expected to increase by 10% or decrease by 6% during the next two-three months. If its strike price at maturity in six months is set as $32 and…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) ANS: 0.9991 Value of Nd2. (Use 4 decimal places) ANS: 0.9990 Volatility rate. (Use percentage and at least, two decimal places) ANS: 15.78% Value of the call option. (Use two decimal places) Value of the put options. (Use two decimal places)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)
- EDC will be issuing preference shares with a total face value of P120,000,000 for a net proceed of P122,000,000. It will be irredeemable and will pay 8% annually. If the tax rate is 25%, what is the effective cost of the preference shares?ABC Corporation plans to purchase a call option for 1,000 Red Corp. ordinary shares at a strike price of P489 per share. The contract will be exercisable four months from purchase. The details about the underlying asset are as follows: Market value per share 534.00 Volatility 10% Risk-free rate 3% If the call option is currently selling at P40,000, it is currently over or (under) valued by how much? Use 360 days in a year.OneChicago has just introduced a new single stock futures contract on the stock of Brandex, a company that currently pays no dividends. Each contract calls for delivery of 1,000 shares of stock in one year. The T-bill rate is 3% per year. Required: a. If Brandex stock now sells at $150 per share, what should the futures price be? (Round your answer to 2 decimal places.) b. Brandex stock now sells at $150 per share. If the Brandex stock price drops by 2.0%, what will be the new futures price and the change in the investor's margin account? (Input all amounts as positive values. Do not round intermediate calculations. Round your answers to 2 decimal places.) c. Brandex stock now sells at $150 per share. If the margin on the contract is $20,000, what is the percentage return on the investor's position, if the Brandex stock price drops by 2.0%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)
- The Bulldogs Inc.’s stock price is believe to decline from its current level of P125 anytime during the next 9 months. A 9-month put option for P975 is available to be purchased and it gives the buyer the right to sell 100 shares at a price of P130 per share. What would be the net profit if a 100-share contract is bought for P975 and Bulldogs Inc.’s stock price actually dropped to P90?Eight months ago, the Zeus Fund entered into a short position in a one-year forward contract on 1,250 shares of Cerner Corporation stock at a forward contract price of $94 per share. Today, the price of Cerner stock is $92.50 per share and the interest rate for continuous compounding is 1%. Cerner stock does not pay dividends. What is today’s market value of the forward contract? If the Zeus Fund wanted to exit the contract today, how much should it be willing to pay, or how much should it expect to receive, from its counterparty?Perpetual preferred stock from Franklin Inc. sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? a. 9.44% b. 9.08% c. 9.82% d. 8.72% e. 10.22%