Confirm that longer maturity means higher prices for both puts and calls.
2 parts with 3 questions each. No plagiarism
Table 19.6 is a simplified book balance sheet for Nike in November 2017. Here is some further
information:
● ● ● ● ●
Number of outstanding shares (N) 1.32billion
Price per share (P) $60
Beta 0.55
Treasury bill rate 0.8%
20-year Treasury bond rate 2.7%
Cost of debt (rD) 3.8%
Marginal tax rate (from 2018) 21%
⟩ TABLE 19.6 Simplified book balance sheet for Nike, November 2017
(figures in $ millions)
Current assets $16,582 Current liabilities $ 6,750
Net property, plant, and equipment 4,117 Long-term debt 3,472
Investments and other assets 3,356 Other liabilities 2,075
Shareholders’ equity 11,758
Total $24,055 Total $24,055
a. Calculate Nike’s WACC. Use the capital asset pricing model and the additional information
given above. Make additional assumptions and approximations as necessary.
b. What is Nike’s opportunity cost of capital?
c. Finally, go to finance.yahoo.com and update your answers to parts (a) and (b).
—‐————————–
Go to finance.yahoo.com. Check out the delayed quotes for Amazon options for different exer-
cise prices and maturities. Take the mean of the bid and ask prices.
a. Confirm that higher exercise prices mean lower call prices and higher put prices.
b. Confirm that longer maturity means higher prices for both puts and calls.
c. Choose an Amazon put and call with the same exercise price and maturity. Confirm that
put–call parity holds (approximately). (Note: You will have to use an up-to-date risk-free
interest rate.)
-
RichardA.BrealeyStewartC.MyersFranklinAllen-PrinciplesofCorporateFinance-McGraw-HillEducation2020.pdf1.PDF -
RichardA.BrealeyStewartC.MyersFranklinAllen-PrinciplesofCorporateFinance-McGraw-HillEducation2020.pdf.PDF
LOOKING FOR THIS ASSIGNMENT OR A SIMILAR ONE? WE HAVE HAD A GOOD SUCCESS RATE ON THIS PAPER! ORDER WITH US TODAY FOR QUALITY WORK AND GET A DISCOUNT!
Disclaimer:
All types of paper that Discount Writers provides is only for the purpose of assistance! No text, paper, assignment, discussion would be similar with another student therefore guaranteeing Uniqueness and can be used with proper references only!
More tools: Better Grades: Choose your Homework Help:
Assignment Help: We would write your papers according to the instructions provided and guarantee you timely work
Entire Online Class Help: We are here for you and we would do your entire Class work from discussions, assignments, Replies, Exams and Quizzes at a Cost
Exam/ Quiz Help: We have a team of writers who specialize on exams from any specific field and we would give you an A+ Grade!
