Q: Distinguish the nominal rate of return from the real rate of return.
A:
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Q: Required: a. Determine the discounted rate of return.
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Q: What is the difference between spot rates andforward rates? When is the forward rate at a premium to…
A: Spot rates are the rates that prevail in the cash market or the rates that are applicable today.…
Q: a. Name of options payoff b. Identify whether positive or negative premium c. Identify break-even…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: payoff for put option buyer and seller?
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Q: What discount rate is used in a lessor’s NPV analysis?
A: Weighted average cost of capital is used as discount rate in Lessor's NPV analysis.
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Q: Explain the following terms, Option price and Strike price
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Q: In binomial approach of option pricing model, fourth step is to create : a. equalize domain of…
A: The Binomial pricing model was developed by Cox, Ross, and Rubinstein in the year 1979. It is also…
Q: ernal rate of return and the discount rate turn pany's discount rate or internal rate of return unt…
A: To find the correct option as,
Q: Define Black-Scholes option pricing model
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Q: did hedging reduce volatility of the realized price?Answer Yes or No and explain
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A: The market risk premium is the variations among the expected return on a market portfolio and the…
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Q: Define discounted payback period
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Q: Explain the difference between the yield to maturity and the yieldto call.
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Q: Which of the following is included inthe risk-free rate? O A. the default premium O B. the expected…
A: Risk free rate is the return on the asset that has zero risk associated to it. It is a theoretical…
Q: ption? What is payoff to call optio
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Q: Briefly explain the difference between the CAPMand the Arbitrage Pricing Theory (APT)
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Q: Compare and contrast the Spot market versus the Future market give examples
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Q: "Fisher effect defines the relationship between nominal rates, real rates, infiation, default…
A: Fischer effect:- It is an important concept of economics that describes the releationship between…
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- Label the following for this diagram: a. Name of options payoff b. Identify whether positive or negative premium c. Identify break-even point d. What is the profitt or loss when stock price is $60 at maturity e. Suppose you have this options position, should you exercise your right (if any) assuming that the stock price is $60 at maturity? Option Payoffs and Profits $40 Long call $20 $0 Option Payoff Option Profit ---- Exercise Price -$20 -$40 $0 $20 $40 $60 $80 Payoff and ProfitLabel the following for this diagram: a. Name of options payoff b. Identify whether positive or negative premium c. Identify breakeven point d. What is the profit or loss when stock price is S60 at maturity e. Suppose you have this options position, should you exercise your right (if any) assuming that the stock price is $60 at maturity? Option Payoffs and Profits Long put $40 $20 $0 Option Payoff Option Profit Exerche Price $20 S40 $20 $40 S60 $80. Stock Price At Maturity Payoff and ProfitLabel the following for this diagram: a. Name of options payoff b. Identify whether positive or negative premium c. Identify break-even point d. What is the profitt or loss when stock price is $60 at maturity e. If you have this option position, should you exercise your right (if any) assuming that the stock price is $60 at maturity? Option Payoffs and Profits $40 $20 $0 Option Payoff Option Profit --- Exercise Price -$20 -$40 $0 $20 $40 $60 $80 Stock Price At Maturity Payoff and Profit
- Whats the profit of the "Straddle" when stock price is $15, $20, $25, $30, $35, $40, $45, $50, $55, and $60 respectively? Given: - Stock price = $35.00 - Call option price = $3.00 - Put option price = $2.00 - Exercise Price = $35.00Suppose that call options on a stock with strike prices $100 and $106 cost $8 and $5, respectively. How can the options be (the profits from option positions and the total profit).Required: a-1. If the stock price at option expiration is $143, will you exercise your call? multiple choice 1 Yes No a-2. What is the net profit/loss on your position? (Input the amount as a positive value.) a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) b-1. Would you exercise the call if you had bought the November call with the exercise price $130?multiple choice 2 Yes No b-2. What is the net profit/loss on your position? (Input the amount as a positive value.) b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) c-1. What if you had bought the November put with exercise price $140 instead? Would you exercise the put at a stock price of $140?multiple choice 3 Yes No c-2. What is the rate of return on your position? (Negative value should be indicated by a minus…
- Suppose that put options on a stock with strike prices $30 and $35 cost $4 and $7, respectively. What is the profit of a bull spread when stock price at maturity is above $35? Select one: a. -3 b. 0 C. 32 d. 2 e. 3 €3. Suppose that a June put option to sell a share for $60 costs $4 and is held until June. (a) short position) make a profit? Under what circumstances will the seller of the option (i.e., the party with a (b) Under what circumstances will the option be exercised? (c) depends on the stock price at the maturity of the option. Draw a diagram showing how the profit from a short position in the optionWhats the profit of the "Bearish Put Spread" when stock price is $25, $30, $35, $40, $45, $50, $55, $60, and $65 respectively? Given: - Stock price = $45.00 - Current option price = 7.0 (put 35) - Current option price = 2.0 (put 45) - Exercise Price = $40.00
- Assume the stock’s future prices of stock A and stock B as the following distribution State Future Price Stock A Future price Stock B 1 $10 $7 2 $8 $9 If the time 1 price of stock A is $6, and the time 1 price of stock B is $5. And C1 represents the time 1 price of claim on state 1, C2 represents the time 1 price of claim on state 2 Use the information about stock prices and payoffs to Find the time 1 price C1 and C2. Find the risk–free rate of return, obtained in this market.Use the Black-Scholes formula to find the value of a call option based on the following inputs. (Round your final answer to 2 decimal places. Do not round intermediate calculations.) Stock price Exercise price Interest rate Dividend yield Time to expiration Standard deviation of stock's returns Call value GA $ $ $ 48 60 0.07 0.04 0.50 0.26Assume a stock is selling for GH¢48.50 with options available at 40, 50, and 60 strike prices.The 50 call option price is at 2.75.a. What is the intrinsic value of the 50 call?b. Is the 50 call in the money?c. Are the 40 and 60 call options in the money?