Use the table below to calculate the premium of the call. This is a 3-year option; the present value must account for T 3. Use (1+r) for discounting. 4. Use the table below to calculate the premium of the call. This is a 3-year option; the present value must account for T=3. Use (1+r) for discounting. SO r $50 6.00% u 2 0.5 3 F3 $59.55 37.3% Strike $80.00 CALL with strike of $80.00 Outcome Ups Downs Probability 1 3 0 5.20% probability 100.00% Cumulative Underlier price $400.00 Revenue Cost from Exercise? from sale purchase Payoff Yes $400.00 $80.00 $320.00 2 2 1 26.20% 94.80% $100.00 Yes $100.00 $80.00 $20.00 3 1 2 43.98% 68.59% $25.00 No $0.00 $0.00 $0.00 4 0 3 24.61% 24.61% $6.25 No $0.00 $0.00 $0.00 Expected value $47.02 $25.13 $21.89

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What is the PV of an annuity due with 5 payments of $2,500 at an interest rate of 5.5%? Hint: when you see the word “due”, it means that the first payment happens right away (rather than at the end of the period) so you must adjust the formula, in Excel make type=1: =PV(Rate, nper, pmt, fv, type=1)

Need help with 4,5,6.

For problem 2, use the following information: Consider 3-month options with premium Strike 35 Call Premium Put Premium 6.13 0.44 40 2.78 1-99 45 0.97 5.08 and the effective annual interest nate 8.33% 2. write down the pay off function, profit function and draw a profit diagram for the following options: (i). Straddle: buy a call and a put with Strike 40. I will be good for both up/down but high premium). (ii) Strangle Call buy 25- strike put and 45- Strike (iii) Symmetric butterfly spreads : straddle + buy 25- Strike written put and 40- Strike 45- Strike call.

Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs. You need a $80,000 loan. Option 1: a 30-year loan at an APR of 8.15%. Option 2: a 15-year loan at an APR of 7.75%. Question content area bottom Part 1 Find the monthly payment for each option. The monthly payment for option 1 is $ enter your response here. The monthly payment for option 2 is $ enter your response here.

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Find the present value PV of the given future value. (Round your answer to the nearest cent.) future valye $1,118 at .03625 simple interest for 518 days  PV = $

What discount rate should a lender charge to earn an interest of 2 1/4 % on a 90-day loan? Hint: An interest rate r and discount rate d are said to be equivalent if these two simple rates give the same present value for an amount due in the future. Thus, r = d/(1 - dt) and d = r/(1 + rt)