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please answer 23 and 24
Canvas Question 23 & 24 are based on the following information:...
1. Draw payoff diagrams for the following option trading strategies. Assume all options have the same...
1. Draw payoff diagrams for the following option trading strategies. Assume all options have the same expiration date. a. Buy a share and write a call on the stock b. Buy a call with exercise price X1 and write a call with an exercise price X2 on the same stock, with X1 < X2. c. Buy a call with exercise price X1, sell two calls with exercise price X2 and buy a call with exercise price X3 with X1 X2...
Suppose you have just purchased one share of Proctor & Gamble stock (PG) for $123. You...
Suppose you have just purchased one share of Proctor & Gamble stock (PG) for $123. You have forecasted that in one year the stock price will either rise to $140 or fall to $108 Suppose further that you can either buy or sell a call option on PG stock with a strike price of $120. Assume that this is a European style contract that expires exactly in one year and that the risk-free interest rate is 2.8% (a) Calculate the...
You are evaluating a stock that is currently selling for $30 per share. Over the investment...
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 answer for 23 is option c. then how to solve question 24 ? 23. You...
the answer for 23 is option c. then how to solve question 24
?
23. You purchased 100 shares of ABC common stock on margin at $70 per share. Assume the initia margin is 50% and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin. A. $27 B. $50. C. $60 D. $80 24. Regarding the previous question, if the stock price declines...
questions 21-24 please 21. The writer of a put option A. Agrees to sell shares at...
questions 21-24 please
21. The writer of a put option A. Agrees to sell shares at a set price if the option holder desires B. Agrees to buy shares at a set price if the option holder desires C. Has the right to buy shares at a set price D. Has the right to sell shares at a set price E. None of the above 22. Advantages of exchange-traded options over Over-The-Counter options include all but which one of the...
Please explain the answer or steps. Thank you. 21. You write a call option with X S55 and buy a call with X $65. The options are on the same stock and have the same expiration date. One of the calls...
Please explain the answer or steps. Thank you.
21. You write a call option with X S55 and buy a call with X $65. The options are on the same stock and have the same expiration date. One of the calls sells for $3; the other sells for $9. What is the break-even point for this strategy? A) $55 B) $60 CS61 (Ans: Higher the strike, lower the price of the call. Because S55 strike pays over [55 to infinity]...
QUESTION 1 Michael opened a margin account with a discount, online broker. Two months ago he...
QUESTION 1 Michael opened a margin account with a discount, online broker. Two months ago he sold short 100 shares of stock; the market price of the stock at that time was $63.50. Today it is priced at $47.30. If he decides to “buy to close” (i.e., buy 100 shares of stock in order to close his open “short position”) what will be his net gain or loss? (For purposes of this problem assume each trade costs $25.) $1,620 gain...
1. Jennifer Magnussen, a currency trader for Chicago-based Black River Investments, uses the following futures quotes...
1. Jennifer Magnussen, a currency trader for Chicago-based Black River Investments, uses the following futures quotes on the British pound to speculate on the value of the British pound. British Pound Futures, US$/pound (CME) Contract = 62,500 pounds Open Maturity Open High Low Settle Change High Interest March 1.4246 1.4268 1.4214 1.4228 0.0032 1.4700 25,605 June 1.4164 1.4188 1.4146 1.4162 0.0030 1.4550 809 a) If Jennifer buys 3 March pound futures, and the spot rate at maturity is $1.4560/pound, what...
help pls Questions 21-27 are based on the following information. CAPM and stock valuation. Your aunt, Beth, plan...
help pls
Questions 21-27 are based on the following information. CAPM and stock valuation. Your aunt, Beth, plans to invest in the common stock of Smart-investment Corporation Knowing that you are studying finance, she asks for your suggestion. You calculation shows that yield on Treasury securities is 6%. You know that the S&P 500 Index's expected annual return is 14% Your coonometric model tells you that beta of this company's stock is 1.25. Aunt Beth tells you that this company...
questions 14-17. (that is comparing expected price of the bond 6months in the future, 1 yr in the future, 1.5 yrs in the futur so on, till maturity 10203 D) 1056.4 as one moves ahead in time and y...
questions 14-17.
(that is comparing expected price of the bond 6months in the future, 1 yr in the future, 1.5 yrs in the futur so on, till maturity 10203 D) 1056.4 as one moves ahead in time and year. The bond has 3 yeals Io 10096 81045 21. h. Question the "expected price of the bondin the future" 2 A stock price is currently $40. Supposeit is known that at the end of the month, it will be either $42...
1. Draw payoff diagrams for the following option trading strategies. Assume all options have the same expiration date. a. Buy a share and write a call on the stock b. Buy a call with exercise price X1 and write a call with an exercise price X2 on the same stock, with X1 < X2. c. Buy a call with exercise price X1, sell two calls with exercise price X2 and buy a call with exercise price X3 with X1 X2...
Suppose you have just purchased one share of Proctor & Gamble stock (PG) for $123. You have forecasted that in one year the stock price will either rise to $140 or fall to $108 Suppose further that you can either buy or sell a call option on PG stock with a strike price of $120. Assume that this is a European style contract that expires exactly in one year and that the risk-free interest rate is 2.8% (a) Calculate the...
the answer for 23 is option c. then how to solve question 24
?
23. You purchased 100 shares of ABC common stock on margin at $70 per share. Assume the initia margin is 50% and the maintenance margin is 30%. Below what stock price level would you get a margin call? Assume the stock pays no dividend; ignore interest on margin. A. $27 B. $50. C. $60 D. $80 24. Regarding the previous question, if the stock price declines...
questions 21-24 please
21. The writer of a put option A. Agrees to sell shares at a set price if the option holder desires B. Agrees to buy shares at a set price if the option holder desires C. Has the right to buy shares at a set price D. Has the right to sell shares at a set price E. None of the above 22. Advantages of exchange-traded options over Over-The-Counter options include all but which one of the...
Please explain the answer or steps. Thank you.
21. You write a call option with X S55 and buy a call with X $65. The options are on the same stock and have the same expiration date. One of the calls sells for $3; the other sells for $9. What is the break-even point for this strategy? A) $55 B) $60 CS61 (Ans: Higher the strike, lower the price of the call. Because S55 strike pays over [55 to infinity]...
help pls
Questions 21-27 are based on the following information. CAPM and stock valuation. Your aunt, Beth, plans to invest in the common stock of Smart-investment Corporation Knowing that you are studying finance, she asks for your suggestion. You calculation shows that yield on Treasury securities is 6%. You know that the S&P 500 Index's expected annual return is 14% Your coonometric model tells you that beta of this company's stock is 1.25. Aunt Beth tells you that this company...
questions 14-17.
(that is comparing expected price of the bond 6months in the future, 1 yr in the future, 1.5 yrs in the futur so on, till maturity 10203 D) 1056.4 as one moves ahead in time and year. The bond has 3 yeals Io 10096 81045 21. h. Question the "expected price of the bondin the future" 2 A stock price is currently $40. Supposeit is known that at the end of the month, it will be either $42...
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