Finance Assignment Help 50
Fixed Income Securities
1. A zero coupon bond with 2.5 years to maturity has a yield to maturity of 25% per annum. A 3-year maturity annual-pay coupon bond has a face value of $1000 and a 25% coupon rate. The coupon bond also has a yield to maturity of 25%. Does the longer maturity bond have a larger interest rate sensitivity? Why or why not? Calculate for each bond the percentage price change associated with a change of yield to maturity from 25% to 26%.
Topic 9: Options
2. Construct profit diagrams or profit tables on expiration to show what position in IBM puts, calls and/or underlying stock best expresses the investor’s objectives described below. Assume IBM currently sells for $150 so that profit diagrams/ tables between $100 and $200 (in $10 increments) are appropriate. Also assume that ”at the money” puts and calls cost $15 each. (As usual, the profit calculations ignore dividends and interest.)
(a) An investor wants upside potential if IBM increases but wants (net) losses no greater than $15 if prices decline.
(b) An investor wants to capture profits if IBM declines in price but wants a guaranteed limited loss if prices increase.
(c) An investor wants to capture profits if IBM declines in price and is ready to accept unlimited losses if prices increase. Further, the investor wants to break even if the stock price does not change between now and the maturity of the options.
(d) An investor wants to profit if IBM’s upcoming earnings announcement is either unexpectedly good or disappointingly bad.
How it Works
How It works ?
Step 1:- Click on Submit your Assignment here or shown in left side corner of every page and fill the quotation form with all the details. In the comment section, please mention product code mentioned in end of every Q&A Page. You can also send us your details through our email id firstname.lastname@example.org with product code in the email body. Product code is essential to locate your questions so please mentioned that in your email or submit your quotes form comment section.
Step 2:- While filling submit your quotes form please fill all details like deadline date, expected budget, topic , your comments in addition to product code . The date is asked to provide deadline.
Step 3:- Once we received your assignments through submit your quotes form or email, we will review the Questions and notify our price through our email id. Kindly ensure that our email id email@example.com and firstname.lastname@example.org must not go into your spam folders. We request you to provide your expected budget as it will help us in negotiating with our experts.
Step 4:- Once you agreed with our price, kindly pay by clicking on Pay Now and please ensure that while entering your credit card details for making payment, it must be done correctly and address should be your credit card billing address. You can also request for invoice to our live chat representatives.
Step 5:- Once we received the payment we will notify through our email and will deliver the Q&A solution through mail as per agreed upon deadline.
Step 6:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.
Features for Assignment Help
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.
We believe in providing perfect, relevant and 100% accurate solutions to the student as per questions asked. All our experts are perfect in providing that so as to give unique experience to the students.
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.
All our works are kept as confidential as we respect the integrity and privacy of our clients.
- Physics Assignment Help
- Chemistry Assignment Help
- Engineering Assignment Help
- Psychology Assignment Help
- Online exam Help
- Marketing Assignment Help
- Arts Assignment Help
- Sociology Assignment Help
- Project Management Assignment
- Case Study Help
- Nursing Assignment Help
- Research Assignment Help
- Operations Management Assignment help
- Accounting Assignment Help
- Biology Assignment Help
- Mathematics Assignment Help
- English Assignment Help
- Business Plan Help
- Essay Writing Help
- Human Resource Assignment Help
- Accounting Homework Help
- Computer Science Assignment Help
- Finance Assignment Help
- Economics Assignment Help
- Statistics Homework Help
- Management Assignment Help
- Strategy Management Assignment Help
- Auditing Assignment Help
- Information Management Assignment Help
- Online Assignment Writing help
- Best Assignment Help
- Humanities Assignment help
3. Suppose today’s stock price of Book.com is $100. With probability 60% the price will rise to $130 in one year and with probability 40% it will fall to $80 in one year. A European put option with a strike price of $90 and a time to expiration of one year sells at $4.
(a) What is the one-year risk free rate implied by no-arbitrage (hint draw a binomial tree as we did in class)?
(b) What would be the no-arbitrage risk free rate if with a probability of 50% the price increases and with a probability of 50% it decreases, keeping all other values constant? Explain!
4. Excel Question. Use the Black and Scholes file posted on the class website. We want to explore the effect of changing the time to expiration T from 1 to 2 years on the value of an out-of-the-money put option. Throughout this exercise we keep the stock price (initial stock price) at S0 = 70, the strike price at X = 40, the dividend rate at delta = 0, and the stock price volatility at sigma = 35%. For the interest rate r, consider various values.
(a) Show how the effect on the put price for T = 1 2 depends on the interest rate and explain intuitively why this happens.
(b) Confirm that the call price is always increasing in the time to expiration T.
Product Code :Fin50
To get answer for this question, kindly click here (Note: Don’t forget to write the product code in comment section)
You can also email us at email@example.com but please mentioned product code in the mail body while sending emails.You can browse more questions to get answer in our Q&A sections here.