ZuoTi.Pro
Question

Suppose you have $36,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling...

Suppose you have $36,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $60 per share. You also notice that a call option with a $60 strike price and six months to maturity is available. The premium is $3. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $65 per share? What about $56 per share?

Annualized Return                         Stock           Option      
  $65 per share % %
  $56 per share % %  
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

Home nert Page Layout Formulas Data Review View dd-Ins s Cut aCopy E AutoSum Calibri ー E ゴWrap Text General ,_a. ars-函Merge & Center, $, % , 弼,8 C Paste B l u. Conditional Format CeInsert Delete Format Formatting as Table Styles2 Clear Sort &Find & Format Painter Clipboard BE94 BD Font Alignment Number Styles Cells Edting BE BF BG BH BI BJ BK BL BM BN BO BP 94 95 96 97 98 36000 investment no of shares purchased no of options purchased 600 (36000/60) 12000 (36000/3) case 1 if price is 65 100 101 102 103 104 105 106 107 108 109 110 shares sale value of shares 39000 (600 x 65) profit- rate of return- 3000 (39000-36000) 8.33% (3000/3600°) 17.36% (1+0.08333)^2-1 60000 (12000 (65-60) annualised rate of return = optionssale value of options- profit rate of return 24000 66.67% (24000/3600O) annualised rate of return = 177.79% (1+0.6667)^2-1 112 4 ‘ ト OCF CASH FLOW STAT N -FCF -ARM MSI confidenceINDEX CURRENCY LOAN CROSS OVER HEDGING MONEY MARKET -GM HPR AM TAX GROWTH SUST-PREF AND DIV POLICY I 04:50 4s ENG 29-01-2019Home nert Page Layout Formulas Data Review View dd-Ins Cut aCopy E AutoSum Calibri Wrap Text General в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Format Paste Sort &Find & Format Painter Formatting as Table Styles2 Clear Clipboard BE130 BD Font Alignment Number Styles Cells Edting BE BF BG BH BI BJ BK BL BM BN BO BP 113 114 115 116 case 2 if price is 56 shares sale value of shares 33600 (600 x 56) profit- rate of return- 2400 (39000-36000) -6.67% (300O/36000) 118 119 120 121 122 123 124 125 126 127 128 129 130 131 annualised rate of return- 12.89% (1-0.06667)^2-1 optionssae value of options- 0 As exercise price (56) is lower than strike price (60), do not exercise profit rate of return- -36000 (0-36000) 100.00% (-36000/36000) annualised rate of return- 100.00% this will remain same notewhen options are not exercised, loss is equal to premium paid 4 ‘ ト OCF CASH FLOW STAT N -FCF -ARM MSI confidenceINDEX CURRENCY LOAN CROSS OVER HEDGING MONEY MARKET -GM HPR AM TAX GROWTH SUST-PREF AND DIV POLICY I 04:53

0 0
Add a comment
Know the answer?
Add Answer to:
Suppose you have $36,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Suppose you have $35,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling...

    Suppose you have $35,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $70 per share. You also notice that a call option with a $70 strike price and six months to maturity is available. The premium is $3.5. MMEE pays no dividends. What is your annualized return from these two investments if, in six months, MMEE is selling for $76 per share? What about $66 per share? Annualized Return                         Stock           Option         $76...

  • Suppose you have $36,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling...

    Suppose you have $36,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $80 per share. You notice that a put option with a $80 strike is available with a premium of $3.00. Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $76 per share. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever...

  • Suppose you have $49,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling...

    Suppose you have $49,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $70 per share. You notice that a put option with a $70 strike is available with a premium of $2.8. Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $66 per share. (Negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required....

  • Suppose you have $36,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selli...

    Suppose you have $36,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $80 per share. You notice that a put option with a $80 strike is available with a premium of $3.00. Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $76 per share. (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever...

  • Suppose you have $40,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling...

    Suppose you have $40,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $40 per share. You notice that a put option with a $40 strike is available with a premium of $3.20. Calculate your percentage return on the put option for the six-month holding perlod if the stock price declines to $36 per share. (A negative value should be indicated by a minus sign. Leave no cells blank-be certain to enter "O" wherever required. Do...

  • 1) Use the following corn futures quotes:     Corn 5,000 bushels   Contract Month Open High Low Settle Chg Open Int...

    1) Use the following corn futures quotes:     Corn 5,000 bushels   Contract Month Open High Low Settle Chg Open Int   Mar 455.125 457.000 451.750 452.000 −2.750 597,913     May 467.000 468.000 463.000 463.250 −2.750 137,547     July 477.000 477.500 472.500 473.000 −2.000 153,164     Sep 475.000 475.500 471.750 472.250 −2.000 29,258      Suppose you buy 20 of the September corn futures contracts at the last price of the day. One month from now, the futures price of this contract is 462.75, and you close out...

  • (11 Suppose that Facebook stock is currently priced at $170 per share and you have bought...

    (11 Suppose that Facebook stock is currently priced at $170 per share and you have bought a put option with the strike price at $150 per share. The option premium is $10. The intrinsic value of your option is A) -$10. B) $0. C) $10. D) $20. One share of General Electric stock is priced at $10 today. Both options below are on General Electric stock and expire in 3 months. Option A Option B Type Call option Put option...

  • Suppose that Xtel currently is selling at $60 per share. You buy 400 shares using $15,000...

    Suppose that Xtel currently is selling at $60 per share. You buy 400 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8% 6. What is the percentage increase in the net worth of your brokerage account of the price of Xtel immediately changes to $63.90 (11) $60 (1) $56 10? What is the relationship between your percentage return and the percentage change in the...

  • can I have the answers for q15-16 112 If you want to keep your position one...

    can I have the answers for q15-16 112 If you want to keep your position one llaintenance margina Initial cash what share price will you b despite the stock price plunge, what alter 14 Margin and Leverage (LO3 and you are charged a 1.5 percen for each of the following share, a. 556 b. $48 c. $32 rice will you be subject to a margin call? If you olunge, what alternatives do you have? Leverage (LO3, CFA4) In Problem 13....

  • DOLL 58 MANCOSA: POSTGRADUATE DIPLOMA IN BUSINESS MANAGEMENT DUE DATE: 26 AUGUST 2019 ASSESSMENT 5 CCOUN...

    DOLL 58 MANCOSA: POSTGRADUATE DIPLOMA IN BUSINESS MANAGEMENT DUE DATE: 26 AUGUST 2019 ASSESSMENT 5 CCOUNTING AND FINANCIAL MANAGEMENT (20) QUESTION1 The following information was extracted from the accounting records Statement of Comprehensive Income for the year ended 31 December 2017 (R) 2018 (R) 1 856 000 1 2000 Sales (750 000 (1 280 000) F3 Cost of sales 450 000 576 000 Gross profit (212 000 (291 200) Operating expenses 26 30000 Depreciation 2 186 0 261 200 Other...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT