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- The common stock of Company XLT and its derivative securities currently trade in the market at the following prices and contract terms: Price ($) Exercise Price ($) Stock XLT $ 21.50 $ - Call Option on Stock XLT $ 5.50 $ 21.00 Put Option on Stock XLT $ 4.50 $ 21.00 Both of these options will expire 91 days from now, and the annualized yield for the 91-day Treasury bill is 3.0 percent. a. Briefly explain how to construct a synthetic Treasury bill position. b. Calculate the annualized yield for the synthetic Treasury bill in part (a) using the market price data provided. c. Describe the arbitrage strategy implied by the difference in yields for the actual and synthetic T-bill positions. Show the net, riskless cash flow you could generate assuming a transaction involving 21 actual T-bills and 100 synthetic T-bills. d. What is the net cash flow of this arbitrage strategy at the option…The current value of BSE SENSEX is 10000 and the annualized dividend yield on the index is 5%. A six-month-futures contract on the BSE SENSEX is quoted at 10200. If the return on Treasury Bills available in the market for the same maturity is 5% and 25 % of the stocks included in the index will pay dividends during the next six months, you are required to a. Determine whether index futures is overpriced or under priced. b. Show risk-free arbitrage profits, if any, available to the investor irrespective of the value of the SENSEX on maturity with detail workings, assuming that the SENSEX on maturity can be i. 9900 orii. 10250 Solve fast pleaseYou enter into a 1-year futures contract on a non-dividend paying stock when the stock price is $100 and the risk-free interest rate is 5% per annum. Six months later the stock price has fallen to $90, and the interest rate is 4% per annum. Which of the answers below is closest to the change in the futures price? Assume discrete compounding and discounting. Question 6Answer a. -12.34 b. -11.40 c. -10.00 d. -13.20
- The stock index future contract involves buying and selling the stock index for a specified price at a specified date. How much will a contract price be if it involves the S&P SmallCap index with a current value of P200 times the index for 1700 points?* a. P340,000 b. P314,000 c. P8,500 d. P342,000The ASX200 index is currently sitting at 6458. The risk-free interest rate is 2% per annum. Exactly three months remain before the Nov-19 SPI200 futures contract expires. The SPI200 is quoted at 6410. This futures price implies that the dividend yield on the ASX200 market index is: The futures price tells us nothing about the dividend yield 2.00% 4.98% 2.48% 0.98%Assume that the current yield on one-year securities is 7 percent, and that the yield on a two-year security is 8 percent. If the liquidity premium on a two-year security is 0.6 percent, then the one-year forward rate is approximately: Group of answer choices 8.6 percent. 7.4 percent. 8.4 percent. 7.6 percent.
- 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 current price of a stock paying no income is 30. Assume the annually compounded zero rate will be 3% for the next 2 years. (a) Find the current value of a forward contract on the stock if the delivery price is 25 and maturity is in 2 years. (b) If the stock has price 35 at maturity, find the value of the forward from part (a) to the long counterparty at maturitySuppose a 10-year, $1,000 bond with a 10% coupon rate and semiannual coupons is trading for a price of $957.81. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 8% APR, what will the bond's price be? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The YTM is _____________(Round to two decimal places.) b. If the bond's yield to maturity changes to 8% APR, what will the bond's price be? The price is $______________ (Round to the nearest cent.)
- On 1 July 2023, Molly Ltd holds a well-diversified portfolio of shares that is valued at $1.55 million. On this date it enters into 60 futures contracts on All Ordinaries Share Price Index futures in which it takes a sell position. The All Ordinaries Index on 1 July 2023 is 2500 with $10 per index point. So the total price of the futures contract is calculated as 2500 × 60 × $10 contracts = $1,500,000. A total deposit of $100,000 is paid on the futures contracts. On 29 July 2023 Molly Ltd decides to sell its portfolio of shares and to close out its futures contracts. On this date, the market value of the share portfolio is $1.725 million and the All Ordinaries Index is 2720. Required: Prepare the entries of Molly Ltd for any financial assets or financial liabilities that arise in each case and show your working process.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?There is a futures contract available on a dividend paying stock. The current stock price is $7.25 and a dividend of $2 will be paid after 6 months. The interest rate is 12% per annum (assuming discrete compounding). The fair price of the futures for delivery one year ahead is closest to which of the values below? Question 8Answer a. $5.90 b. $8.12 c. $5.50 d. $10.40