The level of the Syldavian market index is 21,600 at the start of the year and 26,100 at the end. The dividend yield on the index is 4.3" a. What is the return on the index over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Retum % b. If the interest rate is 5%, what is the risk premium over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Risk Premium %

Suppose you are attempting to value a 1-year expiration option on a stock with volatility (i.e., annualized standard deviation) of σ = 0.34. What would be the appropriate values for u and d if your binomial model is set up using: 1 period of 1 year. 4 subperiods, each 3 months. 12 subperiods, each 1 month.

The Treasury bill rate is 3%, and the expected return on the market portfolio is 14%. According to the capital asset pricing model: a. What is the risk premium on the market?b. What is the required return on an investment with a beta of 1.8? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)c. If an investment with a beta of 0.8 offers an expected return of 8.2%, does it have a positive or negative NPV?d. If the market expects a return of 12.9% from stock X, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Consider the following information on a particular stock:Stock price = $88Exercise price = $84Risk-free rate = 5% per year, compounded continuouslyMaturity = 11 monthsStandard deviation =53% per year.                                                                                                                                                           What What is the delta of a call option?

Suppose that a stock price is currently 51 dollars, and it is known that one month from now, the price will be either 6 percent higher or 6 percent lower. Find the value of an American call option on the stock that expires one month from now, and has a strike price of 49 dollars. Assume that no arbitrage opportunities exist, and a risk free interest rate of 10 percent

Suppose a stock, not paying any dividend, is currently trading at $50. The annual volatility of its price is 31.55%. This implies that in a one-period binomial tree model the stock price will either be $62.5 or $40 in six months. The annual interest rate is 5%. Consider a European call option with a strike price of $50 and maturity in six months. In the one-period binomial tree model, what's the fair value of the call?

1. HEJO company has the current stock price of $20 today. Use a 1 step binomial tree to estimate the price of a oneyear call on thisstock. Assume the price can increase or decrease by 10% in in the next year with equal likelihood. Risk free rate is 2%, the strike is $21. A. Find the hedge ratio(H), (make sure have the correct sign, this will be written out as a decimal B) Find the call's value  or price today Note: Show the calculation without using excel.

Suppose that a stock price is currently 61 dollars, and it is known that at the end of each of the next two six-month periods, the price will be either 18 percent higher or 18 percent lower than at the beginning of the period. Find the value of a European put option on the stock that expires a year from now, and has a strike price of 64 dollars. Assume that no arbitrage opportunities exist, and a risk-free interest rate of 10 percent.

Consider a European call option on a stock with current price $100 and volatility 25%. The stock pays a $1 dividend in 1 month. Assume that the strike price is $100 and the time to expiration is 3 months. The risk free rate is 5%. Calculate the price of the the call option.

Consider a stock with a current price of P = $27.Suppose that over the next 6 months the stockprice will either go up by a factor of 1.41 or downby a factor of 0.71. Consider a call option on thestock with a strike price of $25 that expires in6 months. The risk-free rate is 6%.(1) Using the binomial model, what are the endingvalues of the stock price? What are the payoffsof the call option?