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Question
The after-tax weighted average cost of capital (WACC) is calculated using the formula:
A. WACC = (rD) (D/V) + (rE) (E/V) where: V = D + E
B. WACC = (rD) (1 - TC ) (D/V) + (rE) (E/V) where: V = D + E
C. WACC = (rD) (D/E) + (rE) (E/D)
D. none of the above
Answer
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Related questions
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Suppose VS's stock price is currently $20. In the next six months it will either fall to $10 or rise to $30. What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5% (periodic rate).
A. $5.00
B. $2.14
C. $0.86
D. $7.86
Q:
Suppose Ralph's stock price is currently $50. In the next six months it will either fall to $30 or rise to $80. What is the option delta of a call option with an exercise price of $50?
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C. 0.600
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A call option has an exercise price of $100. At the final exercise date, the stock price could be either $50 or $150. Which investment would combine to give the same payoff as the stock?
A. Lend PV of $50 and buy two calls
B. Lend PV of $50 and sell two calls
C. Borrow $50 and buy two calls
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Briefly explain the term "option delta."
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Using the binomial model, what is the value of a three month option given the following data and assuming there are no time periods other than three months? The exercise price is $40; stock price is $46; the upside price is $48; the downside price is $34; the 3 month interest rate is 2%. The upside and down side have equal probabilities.
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Q:
The Black-Scholes OPM is dependent on which five parameters?
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Q:
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All things being equal, the closer an option gets to expiration, the lower the option price.
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A. Fall by more than the amount of the dividend
B. Fall exactly by the amount of the dividend
C. Fall by less than the amount of the dividend
D. Cannot be predicted
Q:
One key assumption of the Miller and Modigliani (MM) dividend irrelevance argument is that:
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B. There are no capital gains taxes
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Q:
Generally, investors view the announcement of open-market repurchase of stocks as:
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B. good news and the stock price increases
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Generally, investors interpret the announcement of a decrease in dividends as:
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Generally, investors interpret the announcement of an increase in dividends as:
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