1. A van costing $25,000 with a residual value of $5,000 was purchasd by Diamond Corporation. The van's estimated life is 10 years. What's the book value at the end of Year 2 using the declining-balance method? Assume a depreciation rate of twice the straight-line rate. (PLEASE SHOW YOUR WORK AND ALL CALCULATIONS as I do not understand this problem)
2. Stock ABC is trading for $19. The stock has a SD on an annual basis of 40%. The risk free rate on a countinuously compounded basis is 5%.
a. What is the price of a call that expires in 126 days and has a strike price of 20?
b. What is the price of a put that expires in 126 days and has a strike price of 20?
c. What is the delta of the call option?