Suppose the following for European options: Stock price = $94 3-month call options with strike price $97 3-month put option with strike price $98 1-year risk-free rate is 3%. The call option is trading at $5 and there is a similar call option with an exercise price of $100 is trading at $1. The arbitrage gain that can be made is equal to: O a. $1.00 O b. $2.00 O c. $1.02 O d. $2.02 O e. $3.02
Answers
The answer is (a) $1.00, indicating that there is no arbitrage opportunity as the difference between the gains earned from the call options and the put-call parity is $1 and not greater than zero.
To determine if there is an arbitrage opportunity, we can use the put-call parity formula for European options:
C - P = S - K * e^(-r*t)
where C is the call price, P is the put price, S is the stock price, K is the strike price, r is the risk-free interest rate, and t is the time to expiration.
Plugging in the given values, we get:
5 - P = 94 - 97 * e^(-0.03*0.25)
P = 2.98
The put option is trading at $2.98.
Now let's compare the prices of the two call options:
Call option with strike price of $97 is trading at $5
Call option with strike price of $100 is trading at $1
If we buy one unit of the $97 call option and sell one unit of the $100 call option, we would pay a net cost of $4 ($5 - $1). This is equivalent to buying the stock for $94 and selling it for $97, which yields a profit of $3. Since we are paying a net cost of $4 to make a profit of $3, this gives us a negative arbitrage gain of $1.
Therefore, the answer is (a) $1.00, indicating that there is no arbitrage opportunity as the difference between the gains earned from the call options and the put-call parity is $1 and not greater than zero.
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Related Questions
Brown, the president and director of a corporation engaged in owning and operating a chain of motels, was advised, upon what seemed to be good authority, that a superhighway was to be constructed through the town of X, which would be a most desirable location for a motel. Brown presented these facts to the board of directors of the motel corporation and recommended that the corporation build a motel in the town of X at the location described. The board of directors agreed, and the new motel was constructed. The superhighway plans were changed, however, after the motel was constructed, and the highway was never built. Later, a packinghouse was built on property adjoining the motel, and the corporation sustained a considerable loss as a result. The shareholders brought an appropriate action against Brown, charging that his proposal had caused a substantial loss to the corporation and seeking recovery of that loss from Brown. What result
Answers
1. Buyers, sellers, and producers all have someone else they are competing with for economic benefits. This is known as:
O competition
O monopoly
O collusid
O cartels
Answers
Answer:monopoly
Explanation:
yashi is carrying out key activities such as recruitment, onboarding, and performance management. yashi probably works in:
Answers
Yashi probabaly works in the Human Resources department of his company
Human Resources department in every company is responsible for handling and managing everything that concerns the employees in the company. This includes
Recruitment/ hiring, On boarding/ training, Performance evaluation employee benefitsDisciplinary ActionsHere, Yashi is carrying out roles assigned to the Human Resource Department by performing recruitment, onboarding/ training and evaluating the performance of workers.
We can therefore say that Yashi is working in the Human Resource Department of his company/ Organisation.
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Yashi is carrying out key activities such as recruitment, onboarding, and performance management. yashi probably works in:
How is a compressed work week different from a traditional work week?
You work one more day in a compressed work week.
You work forty hours in a compressed work week.
You work one less day in a compressed work week.
You work less than forty hours in a compressed work week.
Answers
Answer:
A compressed work allows the employee to work for 35-40hours workweeks in less than five workdays.
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why can herbal industry florish in nepal? give reason
Answers
The herbal industry in Nepal can flourish because of the widespread availability of medicinal herbs, plants, and shrubs endemic to the country's terrain.
Other reasons-Additionally, the traditional system of medicine that has been practiced in Nepal for centuries provides an established market for medicinal plants. Furthermore, Nepal is located in a region known for its abundance of biodiversity, providing many natural resources which can be used for the expansion of this industry.
Herbs, usually found at altitudes above 3,000 meters, are thought to be rich in natural chemicals. “Because there is no mechanism to label and provide specifications, the country loses huge revenue potential every year,” Bhandari said, adding that the turmeric found in Nepal could be used as a food product if attention is paid to packaging and marketing, added that it can also secure a good market in Europe.
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Scenario 1
The manager of Yang Ltd, a Malaysian company, is seeking your services in educating his new group of interns on some accounting concepts. The interns are unsure about how the following items will be treated on the statement of cash flows. You should clearly discuss each concept, it’s place on the statement of cash flows and identify any additional information that will be required in arriving at an appropriate amount on the statement of cash flows.
1)Credit Sales
2)Share premium
3)Acquisitions and disposal of non-current assets Bank Overdraft
4)Inventory
Scenario 2
Pinte Ltd has just acquired IT equipment for a sum of $3 million. The accounting period for Pinte Ltd runs from January 1 to December 31 each year. The equipment was bought in the second half of the year on July 1, 20X1. Installation costs amounted to $300,000 and other costs to set up the equipment amounted to $700,000. The useful life of the equipment is estimated as 4 years with a salvage value of $500,000.
Advise Pinte Ltd on how it should depreciate the non-current asset. You should use appropriate calculations to support your answer (for reducing balance use 40% per annum). You should also identify any other financial and non-financial considerations that Pinte Ltd must make in arriving at its decision.
Answers
Scenario 1 Credit sales: Credit sales are sales made on account, which means the customer is allowed to defer the payment for a certain period of time.
These sales are reported on the income statement, but the cash flows statement does not show the cash received from customers. Instead, it reflects the cash outflow for the cost of goods sold (COGS) and the allowance for doubtful accounts.
The allowance for doubtful accounts is an estimate of the amount of credit sales that may not be collected. It is recorded as an expense on the income statement and is used to reduce the gross profit. On the cash flows statement, the cost of goods sold is recorded as an increase in the inventory account, and the allowance for doubtful accounts is recorded as a decrease in the accounts receivable account.
Share premium: Share premium is the amount paid by investors in excess of the par value of the shares. It is reported on the statement of shareholders' equity and does not affect the cash flows statement.
Other considerations: Pinte Ltd should also consider other financial and non-financial factors when making decisions about the IT equipment. Financial considerations may include the impact of depreciation on taxes, the impact on cash flow, and the impact on the balance sheet.
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plt restaurant sold 2,500 lunch boxes during the past month with a price of $10.00 per lunch box. during this month, the price of a lunch box is increased by $5.00 and the total number of lunch boxes sold now is 2,200. what is the price elasticity of demand? what is the effect of the decrease in the
Answers
the price elasticity of demand is 0.24
Since we are given that, a restaurant sold 2,500 lunch boxes, with a price of $10.00 per lunch box, later the price increased by $5.00 and they told 2,200 boxes for the new price
we know the percentage change in quantiy is to work out the difference between the two quantities which is
Increase = New quantity - Original quantity / original number x 100
= 2500-2000/2500 × 100
= 300/2500 × 100
= 0.12 × 100
= 12%
The percentage change in price will be:
= 10-5/10 × 100
= 5/10 × 100
= 0.5 × 100
= 50%
Since Price elasticity of demand is the proportion of the rate alter in the amount demanded of an item to the rate alter in price
the price elasticity of demand will be :
= 12%/50%
= 0.24
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Please help. Atleast the top 2
Answers
Answer:
Number 1 is Pure Market. Number two is socialist, I'm pretty sure.
Explanation:
Please mark me brainliest if someone else answers :>
The founders of the U.S. wanted to avoid establishing a permanent aristocracy or group of wealthy families who could control a great deal of the nation’s wealth. How is this idea related to estate and gift taxes?
Answers
Answer:
There are two points that I would like to single out that are very similar. First by implementing tax and gift taxes, Founding Father wanted to weaken families and business of that time, since there was a threat that rich families could become permanent aristocracy which over time could lead to the point where that families will rule the US. Second, by implementing those two taxes, government is taking a share from receivers since the receivers are getting some good that they did not earn it, they have just received it as a gift or as an estate. This way inheritance or gift would be of a much lesser value then it was before someone’s death or before someone made a gift. This was important because wealth of powerful families would just accumulate and grow so government of that time, strictly out of political reasons, prescribed those two taxes, so that the wealth will be smaller of value after tax.
The idea of avoiding an aristocracy by the founders of USA is related to estate and gift taxes because:
There was a need to reduce the influence of the wealthyAccording to the given question, we are asked to show the link which the founders of America had to preventing aristocracy and imposing estate and gift taxes.
As a result of this, we need to remember than an aristocracy is a government based on the wealthy and influential members of the society and this was one of the things which the Founding Fathers of America sought to prevent.
With this in mind, we can see that they imposed gift and estate taxes which was specifically targeted at the extremely wealthy so that their influence would be reduced and the country would not become an aristocracy.
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In which career is it most important to exercise and take physical care of yourself?
A) therapist
B) child care provider
C) Interviewer
D) management
Answers
Answer: therapist
Explanation: i just took a test over this <3
How is international employment different from foreign employment? Give your argument with examples.
Answers
Answer:
Foreign employment is working for a company that is based in another country and you usually only work in one country. International employment is working in multiple countries and often your own home country is one of them
the degree of motivation that accompanies an external search is determined by the consumer's _______.
Answers
The degree of motivation that accompanies an external search is determined by the consumer's needs, desires, and level of involvement with the product or service in question.
The consumer's behavior is shaped by a multitude of factors, including their needs, desires, and motivations. These motivations can be intrinsic, arising from personal preferences and values, or extrinsic, influenced by external factors like social norms or marketing messages. Consumers engage in an external search when they perceive a discrepancy between their current state and their desired state. The degree of motivation for this search depends on the perceived importance of the purchase, the level of risk involved, and the expected benefits of obtaining information. Additionally, individual characteristics, past experiences, and socio-cultural influences play a role in shaping the consumer's motivation and subsequent external search behavior.Various factors can influence the motivation for an external search, including the importance of the purchase, the level of risk involved, personal relevance, and the perceived benefits of obtaining information. Additionally, individual characteristics such as personality traits, past experiences, and socio-cultural influences can also impact the level of motivation for conducting an external search.
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If an agent recommends that a client invest a portion of his portfolio in an international stock fund and is asked whether she should compare the performance of the fund against the S&P 500 Index, how should the agent respond?
Answers
Answer:
A) No, it is preferable to compare the fund against the Morgan Stanley Capital International Europe, Australasia, Far East (EAFE) Index because it covers international securities.
Explanation:
As It is important that a specific mutual fund should be compared against the benchmark i.e. considered appropriate. The performance of the international fund should also be compared against the foreign stock index like EAFE index
So in this way the agent should be responded to the current situation
Therefore the option a is correct
Simon Bank has $0 excess reserves and is fully loaned up if the reserve ratio is:
Answers
Still, Simon Bank is completely lent out and has no redundant reserves, If the Reserve ratio is zero.
A bank is lent up when its redundant reserves equal zero. Last but not least, we will disregard deposits other than confirmable deposits, loans, and reserves.
To further simplify the analysis, we will assume that banks don't have a net worth; their coffers are original to their arrears. The proportion of reservable arrears that marketable banks are needed to keep rather of lending or investing is known as the Reserve ratio.
This isn't entirely settled by the country's public bank, which in the US is the Central bank. The cash reserve rate is a different name for it.
overkill saves are characterized as means held at the bank that surpasses the Central Bank's base prerequisite.
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I'll GIVE BRAINLIEST!!!
FIX IT PLS
Answers
Answer:
What are we suppose to exactly do?
Explanation:
Teresa is considering purchasing a home for $220,000 by taking out a loan with an interest rate of 4.3% for 30 years. What would her monthly payment be?
Use the monthly payment formula to calculate the monthly payment for this loan:
M =
M = monthly payment
P = principal
r = interest rate
t = number of years
Answers
Answer:
$1,088.144
Explanation:
The applicable formula is as below as derived form annuity concepts.
M = PV × r
1 − (1+r)−n
where p= $220,000
r = 4.3% interest rate per year;
Per month interest rate = 0.043 /12=0.00358
r = 30 year, in months = 30 x 12 =360
Therefore
M= $220,000 x 0.00358
1-(1+0.00358) ^ - 360
M=$220,000 x 0.00358
1 - 0.2762
M = $220,000 x(0.00358 /0.7238
M = $220,000 x 0.00494611
M = $1,088.144
markets rely on the idea that prices can help aggregate information in order to produce a forecast. T/F
Answers
It is true that markets rely on the idea that prices can help aggregate information in order to produce a forecast.
Markets rely on the idea that prices can help aggregate information and produce a forecast. This concept is known as the efficient market hypothesis. According to this hypothesis, prices in financial markets reflect all available information, and the collective actions of buyers and sellers result in efficient and accurate pricing.
The idea is that as market participants buy and sell securities based on their analysis and expectations, the prices of those securities incorporate all available information and expectations about their value. This information includes not only publicly available data but also insights and opinions of individual participants.
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Which of these can occur due to soil erosion?
1) Pollute Water Bodies
2)Rain Mud
3)Create Acid Rain
4)Pollute Air
Answers
Soil erosion can pollute the water bodies.The effects of soil erosion are greater than the loss of fertile soil.
What is Soil Erosion?
Soil erosion is the denudation of the top layer of soil. It is a form of soil erosion. This process is the result of the dynamic activity of living things, namely, water, ice, ice, wind, plants, and animals.
It has led to an increase in pollution and soil pollution in rivers and streams, closing these waterways and causing depletion of fish and other species.
Thus, Option 1 is the correct statement.
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in the hvacr trade tubing is joined together by what?
Answers
Answer:
Copper tubing is joined using flare connection, compression connection, pressed connection, or solder. Copper offers a high level of corrosion resistance but is becoming very costly.
Giorgio and his wife decide to spend a week in Nova Scotia and they find a getaway package offered through Sapal travel agency in Mississauga, where a friend of Giorgio works as a manager. A reservation (return flight and hotel) is made over the phone for a total cost of $2930 including the agency fee. During the phone call, Giorgio and the travel agent agree to finalize the payment in person within 3 days. However, two days after this phone call, Giorgio becomes unable to travel due to an unexpected injury. Therefore, Giorgio calls the travel agency and notify the cancellation of the booking. The travel agent informs him that the reservation made over the phone was final and Giorgio had to settle the full payment as per the agreed amount of the package. Upon Giorgio’s refusal, the agent claims they will bring him to Court for breach of contract.
1: Sapal Travel Agency will win in court because this is a valid contract. Explain why you sustain this position and highlight which are the 6 elements of the contract traceable in this case.
2: Sapal travel agency will be unsuccessful in Court because the reservation made by Giorgio over the phone does not qualify as a contract. Explain why you sustain this position, based on an analysis of the essential elements of a contract that could - or could not – be traced in this case scenario.
Answers
1: Sapal Travel Agency will win in court because this is a valid contract, with the six elements of a contract present.
2: Sapal travel agency will be unsuccessful in Court because the reservation made by Giorgio over the phone does not qualify as a contract due to missing essential elements.
1: Sapal Travel Agency will win in court because this is a valid contract. The six elements of a contract traceable in this case are:
Offer: The travel agency offered a getaway package to Giorgio over the phone.Acceptance: Giorgio accepted the offer by making the reservation and agreeing to finalize the payment.Consideration: Giorgio agreed to pay the total cost of $2930, including the agency fee.Capacity: Both parties were capable of entering into a contract.Intent: Both parties intended to create a legal relationship and engage in the transaction.Legality: The contract does not involve any illegal activities.2: Sapal travel agency will be unsuccessful in court because the reservation made by Giorgio over the phone does not qualify as a contract. The essential elements of a contract that are not traceable in this case scenario include:
Agreement: There was no mutual agreement regarding the cancellation terms or the consequences of cancellation.Consideration: Giorgio was unable to provide consideration (payment) due to unforeseen circumstances.Intent: Giorgio's unexpected injury prevented him from fulfilling his intention to travel, making the contract impracticable.Communication of acceptance: Giorgio notified the travel agency about the cancellation, indicating his unwillingness to proceed with the contract.Considering these missing elements, the phone reservation may not be legally binding, and Sapal travel agency may not have grounds to enforce payment or claim breach of contract in court.
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What is does it mean to be financially illiterate
Answers
Answer:
it is the financial skill to know how to do personal financial management, budgeting, and investing.
Slowest step in a process is called bottleneck
Group of answer choices
False
True
Answers
The given statement "slowest step in a process is called bottleneck" is true because it forms a circumstance where there are more requests than the system can handle.
In the world of business, a bottleneck is a scenario when there are too many demands to handle. Process bottlenecks can be brought on by the workforce, software/hardware systems, processes, etc. Your workflow will be slowed down, and you risk racking up additional operational costs.
A process bottleneck, according to the simplest definition, is a work stage that receives more work requests than it can actually handle at its maximum throughput capability which disrupts the work flow.
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How are accrued salaries recorded?
Answers
Accrued salaries are recorded as liabilities. Accrued salaries refer to the salaries earned by employees but not yet paid by the employer.
Companies must record these salaries as a liability on their balance sheet. This is because the company is legally obligated to pay the salaries to the employees, even if they have not yet been paid.
Accrued salaries are recorded when the work has been performed and the salaries are due, but the payment has not yet been made.
Accrued salaries are typically reported as a current liability on the balance sheet, and the amount is reported as an expense in the income statement.
Accrued salaries must be paid on time and in full to prevent any potential legal issues.
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Your manager wants to add more client pcs to an office, but there are not enough ports available. what device should be added to resolve the issue? router firewall server switch
Answers
Based on the above. the device should be added to resolve the issue is option A; router.
What is a router used for?A router is known to be seen as any forms of device that tends to link two or more packet-switched networks or any kind of a subnetworks.
Note that it is one that tends to serves as handling traffic that exist between these networks through forwarding data packets and giving room for a lot of devices to use the same Internet connection.
Therefore, Based on the above. the device should be added to resolve the issue is option A; router.
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Place the steps of the job application process in order.
Hiring company post job description to a job opening
Hiring company conducts interviews
Interested applicants submit resume and cover letter
Hiring company calls references for the job applicant (s) they like the most
Hiring company offers there selected applicant the job
Interested applicants complete the job application provided by the company.
PUT THEM IN ORDER PLS I NEED HELP UNDERSTANDING THIS FOR ENTREPRENEURSHIP
Answers
Answer:
1. Hiring company post job description to a job opening
2. Interested applicants complete job application provided by the company
3. Interested applicants submit resume and cover letter
4. Hiring company conducts interviews
5. Hiring company calls references for the job applicant(s) they like the most
6. Hiring company offers there selected applicant the job
how should i strike up a conversation with a girl i like
Answers
Answer: You gotta start of slow by starting a convo with her
Explanation:
you just started using my business and you want to see how many of your customers have been interacting with your business online. what feature can you use to access this information? insights adwords express my business data reporting location tracking
Answers
The feature you can use to access the information about how many of your customers have been interacting with your business online is "insights".
"Insights" is a tool within Go-ogle My Business that provides you with information about how customers are interacting with your business online. It can show you how many times your business has been viewed, how customers are finding your business, and what actions they are taking on your Goo-gle My Business profile.
By using insights, you can get a better understanding of how your customers are engaging with your business online and make data-driven decisions to improve your online presence. It is a valuable tool for any business owner who wants to track their online performance and improve their online visibility.
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An agent's client calls on Monday to discuss the current market situation. They discuss how 100 shares of KAPCO common stock would be an appropriate addition to the client's portfolio. On Thursday, the client calls and tells the agent to place an order for the KAPCO stock at whatever price the agent feels is best. The agent waits until Friday, purchasing the stock at a price $2 per share below Thursday's low. In this case the agent acted A) improperly; the order should have been placed on Thursday B) properly because the agent used discretion as to price and time C) improperly; the order cannot be placed without prior written authorization allowing discretion D) properly because the agent saved the client money
Answers
Answer:
A) improperly; the order should have been placed on Thursday
Explanation:
An agent is someone that is contracted by a client to effectively manage his business interest and also to follow client instruction on time in order to make profit for the client.
In the given scenario the agent received instructions to place an order for the KAPCO stock at whatever price the agent feels is best.
Since they had initially discussed the suitability of the KAPCO stock before now, the agent should have placed the order immediately.
However his delay till Friday resulted in a loss of $2 per share below Thursday's low.
The agent acted improperly.
Vast creative specialises in styling and art direction in the advertising industry.the management of vc wants to change the structure of the business to introduce additional services .some employee s are resisting change as they feel that it is not necessary to change the business structure
Answers
Explanation:
Resistance to change occurs when there is some kind of change in the organization, such as changes in the structure of the business, changes in teams, technologies, etc.
This is because there is insecurity in employees, often due to lack of sufficient information about the change and fear of not being able to adapt.
To eliminate employee resistance, company managers must communicate how the change will occur and why it is necessary, listing the positives of the changes and the benefits it will bring to the organization, enabling feedback so that employees feel included and their perception be positive.
Gina is about to use a fire extinguisher on a small fire.
What factor determines the type of extinguisher she
should use?