6 Imagine that you are holding 5,000 shares of stock, currently selling at $40 per share....
Imagine that you are holding 5,200 shares of stock, currently selling at $35 per share. You are ready to sell the shares but would prefer to put off the sale until next year due to tax reasons. If you continue to hold the shares until January, however, you face the risk that the stock will drop in value before year-end. You decide to use a collar to limit downside risk without laying out a good deal of additional funds. January...
magine that you are holding 6,100 shares of stock, currently selling at $80 per share. You are ready to sell the shares but would prefer to put off the sale until next year due to tax reasons. If you continue to hold the shares until January, however, you face the risk that the stock will drop in value before year-end. You decide to use a collar to limit downside risk without laying out a good deal of additional funds. January...
4. Suppose PDQ stock is currently selling for $40 and the call with a $40 strike price on the stock is selling for $2.00 and the call with a $60 strike price is selling for $1.00. Calculate the value of a bearish call spread portfolio if the stock price is $10, $20, $30, $40, $50, $60, $70 and $80. (30 Points)
Suppose PDQ stock is currently selling for $40 and the call with a $40 strike price on the stock is selling for $2.00 and the call with a $60 strike price is selling for $1.00. Calculate the value of a bearish call spread portfolio if the stock prite is $10, $20, $30, $40, $50, $60, $70 and $80. (30 Points) 4.
You are evaluating a stock that is currently selling for $30 per share. Over the investment period you think that the stock price might get as low as $25 or as high as $40. There is a call option available on the stock with an exercise price of $35. Answer the following questions about hedging your position in the stock. Assume that you will hold one share. The interest rate is 6%. 1) (5 points) What is the hedge ratio?...
The price of a share of stock is currently $50. The stock does not pay any dividend. At the end of three months it will be either $60 or $40. The risk-free interest rate is 5% per year. An investor buys a European put option with a strike price of $50 per share. Assume that the option is written on 100 shares of stock. What stock position should the investor take today so that she would hold a riskless portfolio...
3. Suppose PDQ's stock is currently selling for $40 and the call with a $40 strike price on the stock is selling for $2.00. Calculate the value of a covered call if the stock price is $20, $30. $40, $50, $60 (10 Points).
Builtrite stock is currently selling for $40 a share. You purchase 200 shares and later the stock is selling for $52 a share. What stock price would trigger a margin call (using 25%)? Group of answer choices $21.33 $42.67 $32.00 $64.00
A stock is currently selling for $70 per share. You could purchase a call with a strike price of $63 for $8. You could purchase a put with a strike price of $63 for $3. Calculate the intrinsic value of the call option. Intrinsic value
please just do question 7. thank you Silicon MicroSystems, Inc. (SMSI) stock is currently selling for $100 and the firm pays no dividends. The stock's volatility is 0.30 and the risk-free rate is 8%. Consider the following 6-month call and put options on SMSI stock (assume that contract size is 1 share): 6. Call 1 Call 2 Call 3 Strike $90 Price $12.817 $6.999 $3.380 Delta Gamma $100$110 0.7690.548 0.333 ma 0.0180.024 0.022 Put 1 90 Put 2 Put 3...