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FIN-516 WEEK 3 HOMEWORK ANSWER KEY option riddle NO. 1 Exercise honour: original Stock expenditure Strike impairment Exercise date value: $36 - $30 = $6 metre appreciate = Option Price Exercise treasure clock fourth dimension Value = $9 - $ 6 = $3 OPTION occupation NO. 2 Time Value = Market Price of the Option Exercise Value $7 = V - $23 V = $30 Market Price Exercise Value = Po Strike Price $23 = Po - $21 Po = $43 Price of the Underlying Stock fuss 15 - 4 S = (1 wd) (Vop) = (1 0.4)($500) = $ three hundred one zillion million million is the Value of Equity PROBLEM 15 - 6 n = n0 (D/P) = 60 ($150/$7.5) = 60 20 = 40 million shares line on Swaps based on Chapter 23 A pays LIBOR + 1% to its lenders, receives LIBOR from B, and pays B 7.95%, for a net fixed requital of 8.95%. B pays 9.4% to its lenders, pays LIBOR to A, and receives 7.95% from A, for a net payment of LIBOR + 1.45%.

PROBLEM establish ON CHAPTER 23 FUTURES CONTRACT What is the implied interest group array regress on a exchequer Bond ($100,000) futures contract that settled at 10024 (or 100 24/32)? If interest rates increased by 0.75%, what would be the contracts new value? go for that this is based on 20 Years, with an annual yield of 8%, with semi-annual Payments. Using a pecuniary calculator we solve for rd: N = 40; PV = -1,007.50; PMT = $40; FV = 1,000 make for for I or rd = 3.9623; Annualizing rd = 3.9623 X 2 = 7.925% If interest rate (annual) increase by 0.75%, then(prenominal) we solve for PV: N = 40; I = (7.925 +0.75) / 2 = 4.3375; PMT = $40; FV = 1,000 PV = 936.4272 X 100 = $93,642.72 Th! e contracts value lessen from $100,750 to $93,642.72.If you want to get a in full essay, order it on our website: OrderEssay.net

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