An S&P 500 index linked CD matures in 4 years, with the face value the same as the current S&P 500 index price, $ 2400. Upon its maturity, the investor will be paid back the face value, plus 60% of the gain on the S&P 500 index. The S&P 500 continuous dividend yield is 1.5% and continuously compounded risk-free rate is 4%. The S&P 500 volatility is 25%. What is the fair value of this CD? O $2215.48 O $2305.90 $ 2351.73 O $2612.48

An S&P 500 index linked CD matures in 4 years, with the face value the same as the current S&P 500 index price, $ 2400. Upon its maturity, the investor will be paid back the face value, plus 60% of the gain on the S&P 500 index. The S&P 500 continuous dividend yield is 1.5% and continuously compounded risk-free rate is 4%. The S&P 500 volatility is 25%. What is the fair value of this CD? O $2215.48 O $2305.90 $ 2351.73 O $2612.48

Name: DONT GIVE ANSWER IN IMAGE FORMAT An S&P 500 index linked CD matures in
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Description: DONT GIVE ANSWER IN IMAGE FORMAT An S&P 500 index linked CD matures in 4 years, with the face value the same as the current S&P500 index price, $ 2400. Upon its maturity, the investor will be paid back the face value, plus 60%of the gain on the S&P 5

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 3P

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