Financial Management u5 2-5

Aug 25th, 2015
RockCafe
Category:
Business & Finance
Price: $10 USD

Question description

Hello, I have four more questions listed below. Thank you

(Q2)Valuation - preferred stock

What is the value of a share of preferred stock that pays a $4.50 dividend, assume k is 10%

(Q3) Valuation - preferred stock

What is the value of a share of preferred stock that pays a $9.50 dividend, assume k is 12%. 

(Q4)Valuation – zero-coupon bond

A U.S. Government bond with a face amount of $10,000 with 13 years to maturity is yielding 5.5%. What is the current selling price?

(Q5)Valuation – options

The following information refers to a six-month call option on the stock of XYZ, Inc.

  • Price of the underlying stock:  $50
  • Strike price of the three-month call:   $45
  • Market price of the option:  $10

a) What is the intrinsic value of the option?

b) What is the option’s time premium at this price?

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