what would be the traded price of the Hill put option?

Hill Ltd. is considering updating their systems, which will cost $100,000. The new system will be depreciated prime cost to zero over its 5-year life. It will probably be worth about $20,000 after 5 years. The new machine will save $20,000 per year in operating costs. The tax rate is 30 per cent, and tax is paid in the year of income. Hill Ltd. has several classes of outstanding bonds, and the average yield is 6%. Its beta is 1.3, historical market risk premium is 7.94%, and the treasury yield is 4%. Please use the above information to answer questions A to F. A) What is the required rate of return for Hill? B) There is a put option on Hill shares with an exercise price of $30. If we expect the Hill share price to be $25 at the option expiry date in six months, what will be the pay-off from the put option? C) If the risk-free rate was currently 2 per cent and the share return volatility (variance) of Hill’s ordinary shares was 5.00 per cent per annum, what would be the traded price of the Hill put option?

find the cost of your paper

Given the bank forward rates in part (a), were short-term interest rates higher or lower in Poland than in Canada? Explain

Your start-up company has negotiated a contract to provide a database installation for a manufacturing company in Poland. That firm has agreed to pay you 100,000 CAD in three-month’s time….

Plot your profits in one year from the contract as a function of the exchange rate in one year, for exchange rates from 0.75 CAD/EUR to 1.50CAD/EUR. Label this line “Unhedged Profits.”

You are a broker for frozen seafood products for Choice Products. You just signed a deal with a Belgian distributor. Under the terms of the contract, in one year you….

What is the present value of the 5 million EUR cash inflow computed by first discounting the EUR and then converting it into CAD?

You are a Canadian investor who is trying to calculate the present value of a 5 million EUR cash inflow that will occur one year in the future. The spot….