Erenco is an up-and-coming stone quarry company a recent, Ask an Expert

Finance

ErenCo is an up-and-coming stone quarry company. A recent report, reflecting the general sentiment of all market participants, projected the following prices and probabilities for ErenCo stock on Feb. 21, 2014: Probability 1/3 1/2 1/6 Stock Price $15 $10 $6 a. According to the EMH, what would you expect the market price of ErenCo stock to be today? Why? b. Nancy, an investor in ErenCo, decides to buy a put option on ErenCo stock with a strike price (exercise price) of $9 which expires on the third Friday of February, 2014. What would she have to pay in today's market for this option? In general, what determines the price an investor will have to pay for an option?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9999232

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Trevi corporation recently reported an ebitda of 31400 and

Trevi Corporation recently reported an EBITDA of $31,400 and $9,500 of net income. The company has $6,900 interest expense, and the corporate tax rate is 35 percent. What was the company's depreciation and amortization e ...

A preferred stock promises to pay 366 in interests every

A preferred stock promises to pay $3.66 in interests every year. The required rate of return is 7.60%. What's the fair price of this preferred stock?

Net present valuenbspriggs corp management is planning to

Net present value: Riggs Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this action will result in additional cash flows of $325,000 over the next three years. If the disco ...

1 the following data are given for the allright

1. The following data are given for the Allright Corporation: Initial cost of proposed equipment $75,000 Estimated useful life ...

Tick the factors that financial manager should be included

Tick the factors that financial manager should be included when computing the incremental free cash flows of an investment decision. Sunk costs Opportunity costs Project externalities Financing costs

Is an institutional client different from an institutional

Is an institutional client different from an institutional investor? If so could you please please give an example of each just so I understand?

A commercial bank will loan you 58734 for 5 years to buy a

A commercial bank will loan you $58,734 for 5 years to buy a car. The loan must be repaid in equal monthly payments at the end of the month. The annual interest rate on the loan is 13.45 percent of the unpaid balance. Wh ...

What is the 5 var in terms of holding period return for a

What is the 5% VaR (in terms of holding period return) for a portfolio with normally distributed returns, a mean return of 20%, and a standard deviation of returns of 40%?

What is property law and what are the four broad categories

What is property law and what are the four broad categories it can be divided into?

You borrow 165000 to buy a house the mortgage rate is 40

You borrow $165,000 to buy a house. The mortgage rate is 4.0 percent and the loan period is 30 years. Payments are made monthly. If you pay the mortgage according to the loan agreement, how much total interest will you p ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert