Why are the probabilities of stock price movements not used in the binomial model for calculating an option’s price? Explain in detail.

Q: CDE Co. has the following liabilities and equity: Accounts payable = P305,200 Income tax payable = P...

A: When one party borrows something from another, usually money, it is referred to as debt. Debt is use...

Q: ing are some of the factors that influence the market price of a corporation: I. Industry prospe...

A: Step 1 These internal and external factors can be used by investors to anticipate stock prices. Inte...

Q: Some recent financial statements for Smolira Golf, Inc., follow. SMOLIRA GOLF, INC. Balance Sheets a...

A: We need to use the following formulas for ratio Total debt ratio =Total liabilities/total assets Deb...

Q: ABC PLC is an all equity financed company with 100 million shares outstanding trading at €2 per shar...

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the questio...

Q: Lou Lewis, the president of Lewisville Company, has asked you to give him an analysis of the best us...

A: Evaluating alternatives: When a company is faced with the choice of two alternatives, both alternati...

Q: If sales are $30,000, fixed costs are margin ratio? $10,000, and variable costs are $7,000 what is t...

A: Contribution Margin Ratio: It represents the money made on each product of the company after adjust...

Q: Did the company paid portion of long term liabilities in year 2020? How much?

A: Note :- Only the first requirement can be answered with the given information.

Q: jPhone, Inc., has an equity multiplier of 1.35, total asset turnover of 1.63, and a profit margin of...

A: Equity Multiplier = 1.35 Total Asset Turnover = 1.63 Profit Margin = 7%

Q: Sixty monthly deposits are made into an account paying 8% nominal interest compounded monthly. If th...

A: We need to use future value of ordinary annuity formula to calculate monthly payment PMT =FVn(1+r)n ...

Q: The following is the excerpt of financial information of Dreamies Corporation on December 31, 2022: ...

A: Solution:- Return on Equity (ROE) means the percentage of net income earned on the shareholder's equ...

Q: Burkhardt Corp. pays a constant $14.90 dividend on its stock. The company will maintain this dividen...

A: Constant dividend are of $14.90 Time period is 6 years Required return is 10% To find: Current Shar...

Q: Assume the time from acceptance to maturity on a $10,000,000 banker's acceptance is 90 days. Further...

A: We can calculate the amount that the exporter pays in discounting by applying the required formula. ...

Q: Jack wins a lottery. He now wants to put a fixed amount into a savings account paying   j1= 4% to co...

A: Here in this case, first, we will compute the PV of annual payment from the 10th year onwards. Then ...

Q: You are planning to retire in 25 years time. Immediately after your retirement, you wish to go for a...

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first...

Q: Sources and Uses of Cash. create the statemen of cash flows from the entries: Net income          ...

A: Statement of cashflows shows the flow of cash in the business. It consists of operating activities, ...

Q: Suppose you want to have $400,000 for retirement in 35 years. Your account earns 10% interest. How m...

A: We can use the concept of time value of money. Here the monthly deposit is in the form of annuity an...

Q: make and buy. The make altermative has an initial equipment cost of $175,000, a life of 5 years, a S...

A: Number of Cameras needed must satisfy the all cost that are necessary to make including processing a...

Q: A coin sold at auction in 2017 for $1,252,000. The coin had a face value of $5 when it was issued in...

A: Rate of Return can be calculated as the net gain or loss earned by an investment divided by the net ...

Q: Explain what the yield curve is, what determines its shape, and how you can use the yield curve to h...

A: The yield curve: The yield curve depicts the yields of bonds with similar credit ratings but with di...

Q: Calculate the present value and future value of an uneven cash flow showing how to value common stoc...

A: Let's assume the cash flow in Year 1 is $100, Year 2 is $200, Year 3 is $300 and Year 4 is $400 and ...

Q: You deposit $500 in an account earning 7% interest compounded annually. How much will you have in th...

A: We can use the concept of time value of money. As per this concept when finding the present value of...

Q: Q2. Given: Revenues/Total assets 13.5% Return on assets (ROA) 1.72% Return on equity (ROE) 18.20% Ca...

A: Solution:- We know, leverage multiplier how much times the company is operating its business from th...

Q: Find the present values of the following cash flow streams. The appropriate interest rate is 8%. (Hi...

A: Present value can be calculated by discounting the cash flow at an appropriate discounting rate. In ...

Q: Two years ago Sam bought a newly issued three- year US government bond (a risk-free asset) with a pr...

A: In the above question the following information is given, Coupon Rate = 5% No. of Year = 1 year Spot...

Q: Melissa wants to retire with $45,000 per month.she needs $4,500,000 in principal at the time she ret...

A: Simple interest is computed by multiplying the daily interest rate by the principal and  later by nu...

Q: If the required return is 12 percent and the company just paid a dividend of $2.80, what is the curr...

A: Share Price: It represents the current market value to buyers and to the seller. The share price ca...

Q: What is the size of the scholarship payments that students at a college would receive at the end of ...

A: The scholarship amount will be the quarterly interest earned on such endowment fund  

Q: For your footwear company, you need to explain the following thinks for projection  Trends in; o ...

A: The forecasted growth and revenues are the important tools which are used by the research analysts f...

Q: Lilly Corporation developed a new process that could be used to make oil out of riverwater. The equi...

A: It is given that a new process is developed that is quite expensive but would eventually lead to low...

Q: Describe the Rights of the Surety.

A: Meaning of surety Its a contract of guarantee which  shall also satisfy all the important conditions...

Q: The total liability of BEN Corp is P337,500.00. If the debt ratio of the company is 45% and 25% of t...

A: The question is related to Ratio Analysis. As per Accounting Equation Total Assets = Equity + liabil...

Q: Calculate ROI and BEP for the following information. Year 0 Year1 Year 2 Year 3 Total benefit 0 3729...

A: To Find: ROI BEP

Q: . What is the inventory turnover? (Do not round intermediate calculations and round your answer to 2...

A: Inventory Turnover: Inventory turnover refers to the number of times a firm is able to replace its ...

Q: The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. ...

A: Present value of perpetual annuity, when growth rate is given, can be calculated as: = Inflow / (Req...

Q: Compare preventive and breakdown maintenance costs

A: The specifications of maintenance types vary throughout the business, making it difficult to disting...

Q: Question 15, 8.2.5 Homework: Homework 3 Part 1 of 3 An investor purchased a 182-day, $100,000.00 T-b...

A: The original yield on the T-bill means the annual return earned by an investor on bill if the bill i...

Q: What is the difference (term of investment) between Money Market, Bond Market, Equity Market, Foreig...

A: Financial markets encompass any marketplace where securities are traded, such as the stock market, b...

Q: Steph creates a ratio spread by buying four 100-strike put options and selling one 110-strike put op...

A: A put option (or "put") is a contract that grants the option buyer the right, but not the obligation...

Q: While buying a new car, Aaron made a down payment of $800 and agreed to make month-end payments of $...

A: Mortgage/ Borrowings Borrowings are the loan which is taken by the individual to meet its financial ...

Q: lolanda purchased a Treasury bond with a coupon rate of 2.62% and face value of $100. The maturity d...

A: Here, Purchase Date is 7/Feb/2018 Maturity Date is 15th/ April/2019 Time Period between two dates is...

Q: Microbiotics currently sells all of its frozen dinners cash-on-delivery but believes it can increase...

A: Here, Price per Carton is $50 Cost Per Carton is $40 Old Units of Sale is 1,000 New Units of Sale is...

Q: Some recent financial statements for Smolira Golf, Inc., follow. SMOLIRA GOLF, INC. Balance Sheets a...

A: (a) Current ratio describes the ability of the firm to satisfy its short term obligations when its c...

Q: What will $800 be worth in 3 months if the nominal rate of interest is 25% and: i. interest is compo...

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one...

Q: Natalie started a fund that would pay out $2,400.00 every month in perpetuity. The fund earns 5.52% ...

A: Given: Particulars Amount Payment $2,400 interest rate 5.52%  

Q: Which statement is incorrect? Zero-coupon bonds are normally sold at a big discount because buyers d...

A: Solution:- Zero coupon bonds are those bonds which only pay redemption value at end, and are issued ...

Q: Finance is the efficient acquisition, allocation, and utilization of funds. Briefly discuss each fin...

A: Finance is all about the acquisition of funds in the most optimal manner, then allocating the acquir...

Q: What is disbursal rate

A: Disbursal rate is an important concept in the realm of financial markets and in the realm of fintech...

Q: ollowing Options traded on the Chicago Board Options Exchange:  a) AstraZ Nov 340 call            ...

A: Call option gives the right to purchase the stock but no obligation to do so and put option gives ri...

Q: QUESTION 26 Consider the following table for Spain and France in which output for grapes and textile...

A: In simple words we can say that absolute advantage means the advantage of produce one goods in place...

Q: : Identify the different types of annuities, calculate the present value and future value of both an...

A: Annuities are payments are that paid periodically each period these amounts are fixed ,variable and ...