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Part a and part b are answered together
3 question (10%). Required: Draw a profit or loss graph for the purchase of put contract...
3 question (10%). Required: Draw a profit or loss graph for the purchase of put contract with exercise price of s30 for which a SS premium is paid a. b. Identify the break-even point, maximum profit, and maximum posses Dr.oec. A. Cirjevskis, professor 09.01.2019
3 question (10%). a Draw a profit or loss graph for purchase of call contract with an exvercise price of SS,for which a so h Identify break-even point, maximum profit, and maximum losses premium is paid
ncentive pay Total 3 question (10%). a Draw a profit or loss graph for purchase of call contract with an exercise price of S5S for which a 6 premium is paid. A Identify break-even point, maximum profit, and maximum losses Dr.oec. A. Čirjevskis, professor 09.01.2019 RISEBA ko
3 question (15%). a Draw a profit or loss graph for call writer with an exercise price of S55 for which a S6 premium is paid. b. Identify break-even point, maximum profit, and maximum losses.
3 question (15%). a Draw a prefit or loss graph for call writer with an exercise price of sSs for which a S6 premium is paid b. Identlfy break-even point, masxdmum preft, and maximum losses. Dr.oec. A. Čirjevskis, professor 09.01.2019
You purchase a put option on a stock. The profit at maturity of the option is ___________ where X equals the option's strike price, ST is the stock price at contract expiration and CP0 is the original purchase price of the option. A) Max(0, ST - X) - CP0 B) Max(0, X - ST ) - CP0 C) Max(0, X - ST - CP0) D) Max(0, ST - X - CP0) The maximum loss a seller of a stock put...
1. Adam buys a put option on British pounds (contract size is £500,000) at a premium of S0.05/£. The strike price is $1.20/£. (a) Graph the profit/loss on the option contract. (b) What is the break-even price? (a) At what range of spot prices does John make profit? 2. Bank of America buys a call option on euros (contract size is €625,000) at a premium of $0.02 per euro. If the exercise price is $0.98 and the spot price of...
Draw a diagram showing the profit and loss of a natural gas put option (for March 2018) with a strike price of $3.10/MMBtu and the premium of $0.2. Make sure to show how the profit/loss situation depends on the gas price at the time of the option maturity. Under what circumstances will the holder of the option make a gain? Under what circumstances will the option be exercised?
10- Today, I bought I put contract on GM with one-year to maturity with an exercise price of $60 at a premium of $7 when GM stock price was $55. Three month later, GM stock price closed at $52 while the option premium was $12 at which time I closed my position by selling my put option. Compute my gain/loss. PS: In all questions above X denotes the exercise price of the options, C=call premium, P=put premium, and S=stock price.
Question 4 (3 marks): Using the information below, calculate the total profit/loss of the CDS contract. Draw a diagram to display the transaction's cash flows. Assume the underlying asset defaults in year 4 and no further payments are made beyond this point. You are long the contract. CDS Contract Total contract value $100,000 Premium 0.65% Frequency Annual Contract length Value of underlying asset Recovery value 5 Years $100,000 7596