Business, 27.12.2020 15:30 dbhuggybearow6jng

Consider a European call option on a non-dividend-paying stock; when the option is written, the stock price is S0, the volatility of the stock price is σ, the strike price is K, the continuously compounded risk-free rate is r, and the term to expiration is T; let c be the price of the option. The Black-Scholes formula for the option price is A. c = SoN (d1) + Ke^-rTN (d2)
B. c = SoN (d1) - Ke^rT N(d2)
C. c = SoN (d1) - Ke^- rT N (d2)
D. c = SoN (d2)- Ke^-rTN(d1)

where N(x) is the cumulative probability distribution function for a standardized normal distribution and d1 and d2 are parameters dependant on the structure of the option, the level of interest rates, and the volatility of the stock price.

a. Using the terminology of the last question (re-printed above – Question 8 from the multiple choice section), specify the Black-Scholes formula for the price of a European put option on a non-dividend-paying stock
b. Explicitly describe the relationship of the parameters d1 and d2 to the structure of the option, the level of interest rates and the volatility of the stock price and the relationship of the parameters to each other; use the notation of the last question (e. g., write the formulas for d1 and d2 )
c. We found that for a dividend yielding stock that there was a simple enhancement possible to convert the result in question 3) to the case of a European call option on a dividend yielding stock. Let q represent the dividend yield and describe the enhancement (which we found appropriate in many representations). Also, show the result for the European call option on a dividend yielding stock (include the formula for d1 and d2 ).

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 01:30

Eliminating entries (including goodwill impairment) and worksheets for various years on january 1, 2013, porter company purchased an 80% interest in the capital stock of salem company for$850,000. at that time, salem company had capital stock of $550,000 and retained earnings of $80,000.differences between the fair value and the book value of the identifiable assets of salem company were asfollows: fair value in excess of book valueequipment$130,000land65,000inventory40,000the book values of all other assets and liabilities of salem company were equal to their fair values onjanuary 1, 2013. the equipment had a remaining life of five years on january 1, 2013. the inventory was sold in2013.salem companyâ€™s net income and dividends declared in 2013 and 2014 were as follows: year 2013 net income of $100,000; dividends declared of $25,000year 2014 net income of $110,000; dividends declared of $35,000required: a.prepare a computation and allocation schedule for the difference between book value of equity acquired andthe value implied by the purchase price.b.present the eliminating/adjusting entries needed on the consolidated worksheet for the year endeddecember 31, 2013. (it is not necessary to prepare the worksheet.)lo6lo1

Answers: 1

Answer

Business, 22.06.2019 03:00

Insurance companies have internal controls in place to protect assets, monitor the accuracy of accounting records and encourage operational efficiencies and adherence to policies. these internal controls are generally of two types: administrative controls and accounting controls. administrative controls are the policies and procedures that guide the daily actions of employees. accounting controls are the policies and procedures that delineate authorizations of financial transactions that are done, safeguard assets, and provide reports on the companyâ€™s financial status in a reliable and timely manner. internal controls should include both preventative and detective controls. the purpose of preventative controls is to stop problems and errors before they occur. detective controls identify problems after they have occurred. preventative controls are usually more effective at reducing problems, but they also tend to be more expensive. internal controls must be flexible to adjust for changes in laws and regulations in addition to adding new products or modifying current ones. companies must also do regular analyses to ensure that the benefits of implementing the controls are worth their costs. when concerned about paying unwarranted insurance claims which type of control would be useful?

Answers: 2

Answer

Business, 22.06.2019 15:20

Martinez company has the following two temporary differences between its income tax expense and income taxes payable. 2017 2018 2019 pretax financial income $873,000 $866,000 $947,000 (2017' 2018, 2019) excess depreciation expense on tax return (29,400 ) (39,000 ) (9,600 ) (2017' 2018, 2019) excess warranty expense in financial income 20,000 9,900 8,300 (2017' 2018, 2019) taxable income $863,600 $836,900 $945,700(2017' 2018, 2019) the income tax rate for all years is 40%. instructions: a. prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. b. assuming there were no temporary differences prior to 2016, indicate how deferred taxes will be reported on the 2016 balance sheet. button's warranty is for 12 months. c. prepare the income tax expense section of the income statement for 2017, beginning with the line, "pretax financial income."

Answers: 3

Answer

Business, 22.06.2019 23:50

The sarbanes-oxley act was passed to question 6 options: prevent fraud at public companies. replace all of the old accounting procedures with new ones. improve the accuracy of the company's financial reporting. both a and c

Answers: 3

Answer

You know the right answer?

Consider a European call option on a non-dividend-paying stock; when the option is written, the stoc...

Questions