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Hello Very important, Need help! Can anyone answer these finance problems? Is that possible to get answers in 7hrs? Very important and let me know,

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Hello

Very important, Need help! Can anyone answer these finance problems?

Is that possible to get answers in 7hrs? Very important and let me know, reply me back please!

Thanks!

image text in transcribed Question 1: A stock is priced at $100. It pays no dividend. The riskless rate is 4% per year. The volatility of the stock is 50% per year. a) Construct a 2 period binomial lattice over a one year time horizon.? b) Compute the price of an American put option with strike $110 that expires in one year. Show the option prices at each node of the lattice and indicate the nodes where the option should be exercised.? Question 2: The assets of a firm are worth $100m, and has a volatility of 20%. The firm is an allequity firm. It is considering altering its capital structure by issuing a 2 year zero coupon bond with face value $60m, and a 2 year zero coupon subordinated debt issue with face value $20m. The riskless yield is 8% continuously compounded. a) Compute the price of the senior debt, its continuously compounded yield to maturity, and the credit spread. b) Compute the subordinated bond price, its continuously compounded yield to maturity, and the credit spread. Explain exactly the logic that led to your conclusion. c) Explain the relationship between the two credit spreads you computed in (a) and (b). Question 3: XYZ issued a security with the following payout in one year If the price is between 40 and 50 dollars XYZ pays the holder 40 dollars. If the price is below 40 dollars they get one share of XYZ. If the price is above 50 they get 0.8 shares of XYZ If the price is above 60 they get 48 dollars. a) Plot out the payout of this \"security\"contingent on the end-of-year stock price of XYZ. b) Describe the product in terms of option contracts. Be very precise in describing the replicating portfolio. c) If riskless interest rates were 5% per year continuously compounded, and if the volatility of the stock was 25% per year, what is the fair price of this contract? Please state all of your assumptions and show your calculations. Assume the current stock price is $38.0. ( Hint use Black Scholes model to price all the options) Question 4: Lev Inc and Unlev Inc are identical in every way except their capital structures. Each firm expects to earn 23m dollars before interest per year in perpetuity, with each firm distributing all its earnings as dividends. Lev has 2.1million shares outstanding each worth 105 dollars. Unlev has no debt and 4.5 million shares outstanding, currently worth 78 dollars a share. Neither firm pays taxes. Is Lev stock a better buy than Unlev stock? Explain in great detail?( Hint M&M)

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