The option is currently A. In-the-money B. At-the-money C. Out-the-money 2. Determine the In/At/Out- the money by _____ 3. Determine the Intrinsic Value
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1. The option is currently
A. In-the-money
B. At-the-money
C. Out-the-money
2. Determine the In/At/Out- the money by _____
3. Determine the Intrinsic Value
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Solved in 2 steps
- Assume the following: LC Exposure = 10,000; Spot Rate = $1.00/LC1.00; 1 Year Forward = $0.98/LC1.00; 1 Year Strike Price = $0.975; Premium = $0.005; and WACC = 8.0% p.a. Please calculate the cost of the forward contract and the option.How long do the following options have before they expire?Call Price = $5Put Price = $9Stock Price = $65Exercise Price = $70Risk-free rate = 3% per annum4d) Price the European call having strike 60 GBP. Use the two-periods binomial model with u = 1.1, d = 0.9 and ∆t = 1. Assume that the risk free rate is 5%, and the current price of the underlying asset is 50 GBP.
- Graph the value of Call European option (K=80, T=1year, S0=80, r = 5%, volatility=10%) over a) a range of underlying prices (40 to 150) b)a range of maturities ( 2 years to maturities) c) a range of volatilities (1% to 100%)Consider the following data for a certain share. Current Price = S0 = Rs. 80 Exercise Price = E = Rs. 90 Standard deviation of continuously compounded annual return = \sigma = 0.5 Expiration period of the call option = 3 months Risk – free interest rate per annum = 6 percent a. What is the value of the call option? Use the normal distribution table. b. What is the value of a put option?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. P342,000
- (Capital Asset Pricing Model) The expected return for the general market is 10.5 percent, and the risk premium in the market is 6.8 percent. Tasaco, LBM, and Exxos have betas of 0.809, 0.677, and 0.578, respectively. What are the appropriate expected rates of return for the three securities? Question content area bottom Part 1 The appropriate expected return of Tasaco is enter your response here%. (Round to two decimal places.) Part 2 The appropriate expected return of LBM is enter your response here%. (Round to two decimal places.) Part 3 The appropriate expected return of Exxos is enter your response here%. (Round to two decimal places.)What is the price of an American CALL option that is expected to pay a dividend of $2 in three months with the following parameters? s0 = $40d = $2 in 3 monthsk = $43 r = 10%sigma = 20%T = 0.5 years (required precision 0.01 +/- 0.01)Consider a stock worth K12.50 that can go up or down by 15% per period. Assume aperiod process of one. The risk-free rate is 10%. Find the value of the call optiontoday, with the strike price of K11.50.
- Inputs Annual Coupon Rate 3.70% Number of Years 6 Face Value (PAR) $1,000 Price $1,100.27 In Excel: a. What is the YTM? b. Calculate Macaulay’s duration and co c. Plot the price-yield relationship using Excel. Hint: (Calculate prices for different yields, e.g., yields from 0.5% to 23.5%; then your x axis is yields and y axis prices. The plot should show an inverse relationship .A. Consider a stock worth K12.50 that can go up or down by 15% per period. Assume aperiod process of one. The risk-free rate is 10%. Find the value of the call optiontoday, with the strike price of K11.50. B. What is the price of a European put option on a non-dividend paying stock when thestock price is K69, the strike price is K70, the risk-free rate is 5% per annum, thevolatility is 35% per annum, and the time to maturity is 6 months?Q1 A long forward contract on a commodity that was negotiated some time ago will expire in 1 months and has a delivery price of $70. The current spot price of the commodity is $59. The risk-free interest rate (with continuous compounding) is 0.09. What is the value of the long forward contract? Q2 A short forward contract on an investment asset that yields 0.08 and was negotiated some time ago will expire in 4 months and has a delivery price of $50. The current spot price of the commodity is $48. The risk-free interest rate (with continuous compounding) is 0.02. What is the value of the short forward contract? Q3 A long forward contract on a commodity that was negotiated some time ago will expire in 2 months and has a delivery price of $76. The current spot price of the commodity is $66. The risk-free interest rate (with continuous compounding) is 2.2%. What is the value of the long forward contract?