On the first day of 2017, B shares were trading at 50 USD per share. The...
On the first day of 2017, B shares were trading at 50 USD per share. The shares pay a quarterly dividend of 0.60c per share if the shareholder has held the share for at least 10 days before the dividend payment. Calculate the fair strike of the one year forward on B given that the USD interest rate is 1%.
Homework Answers
Fo = So less present value of dividend
Fo = Future price
So = spot price
Fo = 50 -[0.6e^-1%*3/12 + 0.6e^-1%*6/12 + 0.6e^-1%*9/12 + 0.6e^-1%*12/12]
=50 - [0.6e^-0.25% +0.6e^-0.5% + 0.6e^-0.75% +0.6e^-1%]
=50- [(0.6/1.0025) + (0.6/1.005) + (0.6/1.0075) + (0.6/1.01)]
=50-[0.5985 +0.5970 + 0.5955 + 0.5941]
=50-2.3851
=47.615$
Add Answer to:
On the first day of 2017, B shares were trading
at 50 USD per share. The...
(a) On January 1st 2017 a share has a price of £15 and is expected to...
(a) On January 1st 2017 a share has a price of £15 and is expected to pay a dividend of £0.95 in 1 year and a further dividend of £1.00 in 2 years. The relevant risk-free interest rate is 3% per annum with continuous compounding. What should be the price of a forward contract, written on this share, which matures immediately after the second coupon is paid and what is the initial value of the forward contract? (40 marks) (b)...
The price of shares of Bank of Florida at the end of trading each day for...
The price of shares of Bank of Florida at the end of trading each day for the last year followed the normal distribution. Assume there were 240 trading days in the year. The mean price was $42.00 per share and the standard deviation was $2.25 per share. (Round your answers to 2 decimal places.) a-1. What is the probability that the end-of-day trading price is over $45.00? Probability a-2. Estimate the number of days in a year when the trading...
The price of shares of Bank of Florida at the end of trading each day for...
The price of shares of Bank of Florida at the end of trading each day for the last year followed the normal distribution. Assume there were 240 trading days in the year. The mean price was $42.00 per share and the standard deviation was $2.25 per share. (Round your answers to 2 decimal places.) a-1. What is the probability that the end-of-day trading price is over $45.00? ______%
A company’s shares are trading at R27. The company declares a dividend of R1.20 per share....
A company’s shares are trading at R27. The company declares a dividend of R1.20 per share. Shareholders are given the option of cash payment or in the form of a scrip dividend. How many new shares will an investor receive if they currently hold 1 000 000 shares and opt for the scrip dividend, assuming the share price is unchanged on payment date? 22 500 000 44 444 1 044 444 37 037
At January 1, 2017, Martinez Company's outstanding shares included the following. 298,000 shares of $50 par...
At January 1, 2017, Martinez Company's outstanding shares included the following. 298,000 shares of $50 par value, 8% cumulative preferred stock 886,000 shares of $1 par value common stock Net income for 2017 was $2,513,000. No cash dividends were declared or paid during 2017. On February 15, 2018, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2017. On April 1, 2017, 429,000 shares...
At January 1, 2017, Pina Company's outstanding shares included the following. 298,000 shares of $50 par...
At January 1, 2017, Pina Company's outstanding shares included the following. 298,000 shares of $50 par value, 7% cumulative preferred stock 921,000 shares of $1 par value common stock Net income for 2017 was $2,560,000. No cash dividends were declared or paid during 2017. On February 15, 2018, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2017. On April 1, 2017, 426,000 shares...
Today you short sell 500 shares of Stock Z, which is trading at $30 per share. Stock...
Today you short sell 500 shares of Stock Z, which is trading at $30 per share. Stock Z does not pay any dividend, and the interest rate is 0%. (a) The initial margin is 40%. What is the amount of equity in your account? (b) A day later you receive a margin call, when the price is $40. What is the maintenance margin? (You will not receive a margin call if the price is $39.99.) (c) When you receive the margin call at $40,...
2017 Jan. 20 Purchased 1,000 shares of Ford Motor Co. at $27 per share plus a $130 с㎝ussion. Feb...
2017 Jan. 20 Purchased 1,000 shares of Ford Motor Co. at $27 per share plus a $130 с㎝ussion. Feb. 9 Purchased 2,900 shares of Lucent at $31 per share plus a $195 commission 0ct. 12 Purchased 740 shares of Z-Seven at $7.60 per share plus a 100 commission. Dec. 31 Fair value of the short-term investnents in trading securities is $126, 300. 2018 Apr. 15 Sold 1, 000 shares of Ford Motor Co. at $31 per share less a $290...
a. In 2017, Kevin purchased 5,000 shares of Purple Corporation stock at $6 per share. In...
a. In 2017, Kevin purchased 5,000 shares of Purple Corporation stock at $6 per share. In 2019, he receives a 5% preferred stock dividend. At the time of the stock dividend, the common stock of Purple Corporation has a fair market value of $9 and the preferred stock has a fair market value of $12 per share. Upon receipt of the preferred stock dividend: What is Kevin's per share basis in the Purple Corporation stock? How much taxable income does...
Exercise 15-11 Transactions in held-to-maturity, trading, and stock investments LO P1, P2, P4 E a. On...
Exercise 15-11 Transactions in held-to-maturity, trading, and stock investments LO P1, P2, P4 E a. On February 15, paid $150,000 cash to purchase GMI's 90-day short-term notes at par, which are dated February 15 and pay 11% interest (classified as held-to-maturity). b. On March 22, bought 550 shares of Fran Inc. common stock at $34 cash per share. Cancun's stock investment results in it having an insignificant influence over Fran. c. On May 15, received a check from GMI in...
(a) On January 1st 2017 a share has a price of £15 and is expected to pay a dividend of £0.95 in 1 year and a further dividend of £1.00 in 2 years. The relevant risk-free interest rate is 3% per annum with continuous compounding. What should be the price of a forward contract, written on this share, which matures immediately after the second coupon is paid and what is the initial value of the forward contract? (40 marks) (b)...
The price of shares of Bank of Florida at the end of trading each day for the last year followed the normal distribution. Assume there were 240 trading days in the year. The mean price was $42.00 per share and the standard deviation was $2.25 per share. (Round your answers to 2 decimal places.) a-1. What is the probability that the end-of-day trading price is over $45.00? Probability a-2. Estimate the number of days in a year when the trading...
At January 1, 2017, Martinez Company's outstanding shares included the following. 298,000 shares of $50 par value, 8% cumulative preferred stock 886,000 shares of $1 par value common stock Net income for 2017 was $2,513,000. No cash dividends were declared or paid during 2017. On February 15, 2018, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2017. On April 1, 2017, 429,000 shares...
At January 1, 2017, Pina Company's outstanding shares included the following. 298,000 shares of $50 par value, 7% cumulative preferred stock 921,000 shares of $1 par value common stock Net income for 2017 was $2,560,000. No cash dividends were declared or paid during 2017. On February 15, 2018, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2017. On April 1, 2017, 426,000 shares...
2017 Jan. 20 Purchased 1,000 shares of Ford Motor Co. at $27 per share plus a $130 с㎝ussion. Feb. 9 Purchased 2,900 shares of Lucent at $31 per share plus a $195 commission 0ct. 12 Purchased 740 shares of Z-Seven at $7.60 per share plus a 100 commission. Dec. 31 Fair value of the short-term investnents in trading securities is $126, 300. 2018 Apr. 15 Sold 1, 000 shares of Ford Motor Co. at $31 per share less a $290...
a. In 2017, Kevin purchased 5,000 shares of Purple Corporation stock at $6 per share. In 2019, he receives a 5% preferred stock dividend. At the time of the stock dividend, the common stock of Purple Corporation has a fair market value of $9 and the preferred stock has a fair market value of $12 per share. Upon receipt of the preferred stock dividend: What is Kevin's per share basis in the Purple Corporation stock? How much taxable income does...
Exercise 15-11 Transactions in held-to-maturity, trading, and stock investments LO P1, P2, P4 E a. On February 15, paid $150,000 cash to purchase GMI's 90-day short-term notes at par, which are dated February 15 and pay 11% interest (classified as held-to-maturity). b. On March 22, bought 550 shares of Fran Inc. common stock at $34 cash per share. Cancun's stock investment results in it having an insignificant influence over Fran. c. On May 15, received a check from GMI in...
Most questions answered within 3 hours.
-
5. Discuss the use of fault tree analysis (FTA) for risk
assessment (maximum one paragraph).
asked 30 minutes ago -
Given that a sample of aluminium oxide has a Young's modulus of
393 GPa and a...
asked 2 hours ago -
At a certain temperature, the equilibrium constant, Kc, for this
reaction is 53.3.
H2(g)+I2(g)−⇀↽−2HI(g)Kc=53.3
At this...
asked 3 hours ago -
Question1 ) The STL provides similiar classes called stack and
queue, both of which gave functions...
asked 4 hours ago -
For Questions 1-4, assume you have 5 bits available:
1. For (positive) integers: What is the...
asked 4 hours ago -
convert grams into vloume with the density of water being at
.997514 g/cm^3 at 23.1 Celsuis...
asked 6 hours ago -
Foreman company obtained a $20,000, 6% loan on May 1, 2018.
Principal and interest will be...
asked 6 hours ago -
5. Problem 11.05 (Discounted Payback)
eBook
Project L costs $60,000, its expected cash inflows are $14,000
per...
asked 6 hours ago -
1. Which of the following is true about politics and health
organizations?
A. Health organizations are...
asked 7 hours ago -
A space vehicle is coasting at a constant velocity of 18.1 m/s
in the +y direction...
asked 8 hours ago -
5) Use the following balanced equation to answer questions
(a)-(i).
3 Cu(s) + 8 HNO3(aq) →...
asked 8 hours ago -
A three-year maturity bond with a 12% annual coupon rate is
currently traded at par $1000...
asked 8 hours ago