1a. A stock trades for $42 per share. A call option on that stock has a strike price of $54 and an expiration date six months in the future. The volatility of the stock's returns is 41%, and the risk- free rate is 5%. What is the Black and Scholes value of

Q: Explain this line more, please: "=V1V0×100= 418.91×N455.82×N×100=91.90251" N is unkown (as far as…

A: Portfolio: It represents a collection of financial securities such as bonds, stocks, commodities,…

Q: The answer is somewhat close. The correct answer is 6.8810.

A: Given: Value of call = $1.44 Strike price = $25.60 Value of shares = $20 Interest rate = 2.5%…

Q: Identify the break-even point in the chart below: a. The yellow point b. None are the break-even…

A: The Break-even point is the level of sales at which Fixed Cost is equal to Contribution. In other…

Q: Discuss the different types of risks at risk management?

A: Events can have negative impact, positive impact, or both. Events with a negative impactrepresent…

Q: THE SMITH COMPANY Using the business transactions below, complete T-accounts for the Smith Company.…

A: T Accounts    1. Cash Account Particular Debit Particular Credit         To capital A/c…

Q: d. Calculate the amount of cash Heidi's paid suppliers of retail merchandise, which includes the…

A: Statement of cash flow: It refers to a financial statement that shows all the cash payments and…

Q: Can you also complete part 2 and part 3? Also, 50*e^(.04*.5)=51.01 not 51.99

A: Part 2:   Expected stock price in 6 months: = 0.6 x $50 x 1.20 + 0.4 x $50 x 0.90 = $57   Expected…

Q: The Probability and Return for the four financial instruments are given for your reference in the…

A: Given: Economy Probability(P) HSBC Pandemic 0.20 0.04 Recession 0.25 0.32 Normal 0.30 0.18…

Q: 6600 is not the answer

A: Child Tax Credit is $3,600 for children aged 6 and Under at end of 2021 Child Tax Credit is $3,000…

Q: E15.11

A: As posted multiple sub parts questions we are answering only first three sub parts kindly repost the…

Q: 321,818 is incorrect. What is the correct answer?

A: Revenue: We consider unit sales and price per unit to determine total revenue.Variable Costs: Based…

Q: 1 . S u p p o s e   y o u   a r e   c o m p a r i n g   t w o   f i r m s   w i t h i n   a n   i n…

A: Since you have posted multiple questions, as per the guidelines only the first question will be…

Q: Question 8

A: When net credit sales is divided with average accounts receivable it results in receivable turnover…

Q: groupthink

A: Organization - Management's foundation is organization because, without effective organization, no…

Q: How do I do PR 20-3a

A: Sales revenue: It is the revenue earned by a business on selling the goods or providing services to…

Q: 1 . F r e d O n g k e k o w i s h e s t o h a v e P 4 M i n a r e t i r e m e n t…

A: 1. PV = A * 1-(1+r)-nr where , PV  =  present value of annuity A = periodic withdrawals r = interest…

Q: 1 . F r e d O n g k e k o w i s h e s t o h a v e P 4 M i n a r e t i r e m e n t…

A: Annual withdrawal refers to an amount withdraw at every period from the fund created for the purpose…

Q: Please answer #9-#13

A: If the person invests $350 per month for 15 years then this situation refers to an ordinary annuity.…

Q: Explanation 1031 like-kind exchange

A:

Q: 605.53 is not the correct answer, please double check

A: Traditional Model & Expected Cash Flow Model: Traditional Approach - In the traditional…

Q: 1(1.25)/1.1+[1(1.25)3/(0.10-0.06)]/1.1 Simply the equation.

A: 1(1.25)/1.1+[1(1.25)3/(0.10-0.06)]/1.1

Q: For the following diagram, compute the IRR. 12.500 1000 2000 3000 4000 5000

A: IRR  of a project is the discount rate which makes net present value of the project equals to zero.…

Q: Carefully explain the cross-sectional test of the CAPM.

A: The Capital Asset Pricing Model (CAPM) is a mathematical model that describes the relationship…

Q: Solve for i 17,495=299 -1- (1 + i) - 60

A: The present value of annuity depends on the period and interest rate and payment done and these…

Q: whats 1100+90

A: The question was a simple arithmetic problem that required adding two numbers together. In this…

Q: What is free trade what are its pros and cons?

A: Trade is an economic activity in which buying and selling are involved. It involves buying and…

Q: The answer is somewhat close. The right answer is 1.5337 Please clarify

A: Stock price is $50 Strike price is $52 Risk free rate is 1% Time period is 3 months To Find: Value…

Q: Which of the following value is concerned with the way we approach the end states?

A: Option a

Q: 1 . G i v e   t h r e e   p o s s i b l e   c a u s e s   o f   a n   a d v e r s e   d i r e c t…

A: Typically a month or a quarter, a company's cash inflows and outflows are forecasted using the cash…

Q: E10.2

A: Interest accrued on June 30 = Face value of note x rate of interest  x No. of months /12 = $90,000 x…

Q: This is wrong.....>2023 is not 19870.07. Please try again. The rest is right.

A: Lease Amount of Year 6 = a = $1596 millionTime = t = 6 YearsDiscount Rate = r = 6%

Q: 1,525,394 is the wrong answer. what is the correct one?

A: The recovery of net working capital (NWC) refers to the return of funds initially tied to current…

Q: The numbers indicate that it would be profitable to accept a special order. Should we consider any…

A: We often see companies receiving special orders for selling a product from some customers. To…

Q: two questions

A: Prepare an income statement.

Q: Problem 9-12 (IAA)

A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…

Q: 4. What is sensitivity analysis?

A: What Is Sensitivity Analysis?

Q: What is FASB ASC Topic 842 about?

A: FASB ASC is the authoritative source of U.S. Generally Accepted Accounting Principles (GAAP)…

Q: Al Fathma LLC manufactures a line of equipinen this year, which also has a one-year quarantee if the…

A:

Q: The loss of material during production that does not have any recoverable value are classified as…

A: Introduction: Material Loss: While producing , packing and storing some extent goods are damaged…

Q: What happens when a registrant is suspended?

A: When a registrant is suspended, it means that their license or registration to practice in a…

Q: it say 43,636.36 is incorrect

A: Here,Annual Incremental Cahs Inflows is $16,500Time Period is 3 yearsInterest Rate is 10%Note: As…

Q: it say 6224.00 is incorrect

A: The problem is based on present worth analysis. Here, net present value of the investment and…

Q: A7 please help[.....

A: A waterfall chart is a form of data visualization that helps in understanding the cumulative effect…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.