A stock trades at $100 today. In a year it will either be $120 or $30. What is the price of a $90 - strike put today if the risk-free rate is 10% ? Group of answer choices a. 6.06 b. 0.00 c. 60.60 d. 13.33
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- A stock trades at $100 today. In a year it will either be $120 or $30. What is the price of a $90-strike put today if the risk-free rate is 10%? Group of answer choices a. 6.06 b. 0.00 c. 60.60 d. 13.33What is the most you should be willing to pay for the stock in the table? Expected Expected Price in 1Dividend in 1 year Required Current Return Price Year $376.29 $3.91 5.80% $89.00Suppose a stock is currently trading for $35, and in one period it will either increase to $38 or decrease to $33. If the one-period risk-free rate is 6%, what is the price of a European put option that expires in one period and has an exercise price of $35? $0.51 $2.32 $1.55 $3.00 $0.76
- I need this question general AccountingGiven the maturity of an American put option 2 years, riskfree rate 10%, volatility of the stock 40%, current spot price of stock $50, strike price $50, what is the one-step gross rate of stock when it goes up considering a three-step binomial tree? O A. 1.386 O B. 1.105 O C. 0.924 O D. 1.524I need both answers
- Suppose you are thinking of purchasing the SunStar’s common stock today. If you expect SunStar to pay $0.80 dividend at the end of year one and $1.6 dividend at the end of year two and you believe that you can sell the stock for $15 at that time. If you required return on this investment is 10%, how much will you be willing to pay for the stock? a. $13.95 b. $14.44 c. 14.19 d. $15.51Solve this question financial accountingIf risk free rate is 7% and the market return is 15%. Compute the expected and required return on each stock, determine the appropriate trading strategy Stock Price today Price in 1 year Dividends in 1 year Beta A $25 $27 $1 1 B $40 $45 $2 0.8 C $15 $17 $0.50 1.2
- Consider a stock with a current price of P $27 Suppose that over the next 6 months the stock price will either go up by a factor of 1.41 or down by a factor of 071. Consider a call option on the stock with a strike price of $25 that expires in 6 months. The nsk-free rate is 6%. (1) Using the binomial model, what are the ending values of the stock price? What are the payoffs of the call option? (2) Suppose you write one call option and buy N shares of stock How many shares must you buy to create a portfolo with a riskless payoff Ge, a hedge portfolio)? What is the payoff of the portfolio? 13)What.is the.present.value of the hedge port- Tolot What &the value of phe calt.option? (4) What s a teplieatirg portfolio What is 2otrage?Year AT&T Stock Returns Market Index Returns 1 8 6 2 7 3 3 10 12 4 14 13 5 8 9 The equation of the characteristic line for AT&T is: Group of answer choices Return = 0.538 + 0.9200*Market Return Return = -3.089 + 1.2436*Market Return Return = 0.813 + 0.6530*Market Return Return = 0.471 + 0.0311*Market Return Return = 4.578 + 0.5607*Market ReturnYou have observed the following returns over time: Year Stock X Stock Y Market 2017 14% 12% 13% 2018 21 7 8. 2019 -13 -7 -11 2020 2 3 2021 20 14 Assume that the risk-free rate is 6% and the market risk premium is 5%. a. What are the betas of Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places. Stock X: Stock Y: b. What are the required rates of return on Stocks X and Y? Do not round intermediate calculations. Round your answers to two decimal places. Stock X: % Stock Y: % c. What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y? Do not round intermediate calculations. Round your answer to two decimal places. %