Introduction: Real option analysis (ROA) is a decision-making structure that basically calculates the value of a future business decision. ROA borrows from financial options theory. A financial option gives the buyer of a financial asset the right‚ but not the obligation‚ to buy a stock or bond‚ for example‚ at a predetermined price at a future date. By analogy‚ a real option is a managerial decision-making tool that calculates the value of a business decision that a manager has an option‚ or right‚ but
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$50. The stock pays a dividend of $5 in 3 months. A 6-month European put option on the stock has a strike price of $48 and a premium of $4.38. The continuously compounded interest rate is 8%. Calculate the premium for a 6-month European call option on the stock with a strike price of $48. * A 1.02 * B 3.36 * C 3.46 * D 4.38 * E 5.40 2 1. An "exchange call option" gives the owner of the option the right to give up one share of Stock A in exchange for receiving one share
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General Computer Questions [pic] General Computer Question 1: What is a computer? Answer: A common‚ somewhat simplified‚ definition is that the computer is an electronic device that can be used to process information. Today‚ computers are not only used for calculations‚ but also for creating and manipulating text and pictures. They are used to design bridges and spacecraft‚ to record a company’s sales and to keep track of customers‚ to create a school newspaper‚ or to estimate the cost
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Chapter 15 Quiz 15.1) A portfolio is currently worth $10 million and has a beta of 1.0. An index is currently standing at 800. Explain how a put option with a strike price of 700 can be used to provide portfolio insurance. Index goes down to 700 10*(800/700)= 8.75 million Buying put options= 10‚000‚000/800= 12‚500 If you buy the options at 800‚ the value will be 12‚500 times the index with a strike price of 700 therefore providing protection against a drop in the value of the portfolio below
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annual fee at the initial registration‚ it is likely that the customer will use the membership less frequently throughout the year. The downfall to this approach is that the customer will likely not renew its membership in the following year. Another option a fitness club may offer would be to have the customer sign a year contract and bill the customer monthly instead of one lump some annually. This method is more effective because the customer is aware on a monthly basis of what he or she paying.
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Question 1: Consider an option on dividend-paying stock when stock price $30‚ the exercise price is $29‚ the risk-free interest rate is 5% p.a.‚ the volatility is 25%p.a. and time to maturity is 4 months. Assume that the stock is due to go ex-dividend in 1.5 months. The expected dividend is 50cents. a. b. c. what is the price of the option if it is a European call? What is the price of the option if it is a European put? Use the results in the Appendix to this chapter to determine whether there
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Marketing Mix Paper – Price Pricing is the amount of money that customers are willing to pay a business for a good or service. There are a lot of contributing factors that businesses must take into consideration when it comes to effectively setting a price for a good or service. It includes direct and indirect cost as well as opportunity cost. Pricing is one of the most important elements of the marketing mix. It is the only one of the components that generate revenue‚ while promotion‚ place
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There are several differences between cost-based pricing and value-based pricing. In this essay we will consider a few of them. Value-based pricing is based on the customer’s perception of value rather than the seller’s cost as the key. Cost-based pricing is based on the product. A company comes up with an idea of what they think would be a good product and sets the price after considering all the production costs plus a target profit. (Kotler‚ Armstrong‚ 2008‚ p. 285‚ 286) Instead of starting
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Selecting a Pricing Method 3 major considerations in price setting : costs of production‚ distribution‚ communication set a floor to the price competitors’ prices and the price of substitutes provide an orienting point customers’ assessment of unique features establishes the price ceiling (plafond) Companies select a pricing method that includes 1 or more of these three considerations. We will examine 6 price-setting methods: Mark-up pricing‚ target-return pricing‚ perceived-value
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Page 1 Introduction 3 2 Introduction – Some more facts 4 3 Introduction – Triple bottom-line 6 4 Triple bottom-line - Virgin Atlantic – Social perspective 9 5 Triple bottom-line - Virgin Atlantic – Environmental perspective 10 6 Triple bottom-line - Virgin Atlantic – Economical perspective 12 7 Sir Richard Branson – Founder of Virgin Atlantic – Introduction and Initiatives 13 “Safety‚ security and consistent delivery of the basics are the foundations of everything we
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