Questions from Business Statistics

Q: A stock option is on a February, May, August,

A stock option is on a February, May, August, and November cycle. What options trade on (a) April 1 and (b) May 30?

Q: A company declares a 2-for-1 stock split.

A company declares a 2-for-1 stock split. Explain how the terms change for a call option with a strike price of $60.

Q: Companies X and Y have been offered the following rates per annum

Companies X and Y have been offered the following rates per annum on a $5 million 10-year investment: Company X requires a fixed-rate investment; company Y requires a floating-rate investment. Design...

Q: Explain the statement at the end of Section 12.1 that

Explain the statement at the end of Section 12.1 that, when dividends are zero, the principal protected note cannot be profitable for the bank no matter how long it lasts.

Q: List the six factors that affect stock option prices.

List the six factors that affect stock option prices.

Q: What is the effect of an unexpected cash dividend on (a

What is the effect of an unexpected cash dividend on (a) a call option price and (b) a put option price?

Q: What is a lower bound for the price of a 2-

What is a lower bound for the price of a 2-month European put option on a non-dividend- paying stock when the stock price is $58, the strike price is $65, and the risk free interest rate is 5% per ann...

Q: The spot price of oil is $50 per barrel and the

The spot price of oil is $50 per barrel and the cost of storing a barrel of oil for one year is $3, payable at the end of the year. The risk-free interest rate is 5% per annum continuously compounded....

Q: The price of a European call that expires in 6 months and

The price of a European call that expires in 6 months and has a strike price of $30 is $2. The underlying stock price is $29, and a dividend of $0.50 is expected in 2 months and again in 5 months. Ris...

Q: A stock is expected to pay a dividend of $1 per

A stock is expected to pay a dividend of $1 per share in 2 months and in 5 months. The stock price is $50, and the risk-free rate of interest is 8% per annum with continuous compounding for all maturi...