You own 1,000 shares of Apple. Apple has a monthly beta of 1.28 to the S&P500 Index. The current 3-month e-mini S&P 500 Future is trading at 4,038.5; the contract unit is $50 * S&P 500 index value (so each contract is worth $50*4038.5). You have a negative view about the market and think Apple price would go down; you want to hedge that exposure. 1. How many e-mini S&P 500 Future do you need to hedge your Apple exposure? 2. Do you short/long these future contracts?

You would like to speculate on a rise in the price of "Microsoft". The current stock price is $ 100, and a three-months call with a strike price of $ 102 costs $5. You have $10,000 to invest. a. Identify two alternative investment strategies in “Microsoft “with the potential gains and losses using the following two scenarios: • If the spot price went up to $ 110. • If the spot price went down to $ 90. b. Explain the results

An investor is considering purchasing Apple’s stock for $150 per share. The investor is optimistic (bullish) that the price will increase to $155 by August 19 (appx one month) and decides to buy (long) a call option for $3.95 per share.   What is the breakeven value of this potential investment?

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $44 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Initial margin b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places.) Stock price reaches

You would like to speculate on a rise in the price of "Microsoft". The current stock price is $ 100, and a three-months call with a strike price of $ 102 costs $5.  You have $10,000 to invest. Identify two alternative investment strategies in “Microsoft “with the potential gains and losses using the following two scenarios: If the spot price went up to $ 110. If the spot price went down to $ 90.

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share. How much additional cash must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position? Enter your answer without the dollar sign How high can the price of the stock go before you get a margin call if the maintenance margin is 25% of the value of the short position? Round your answer to two decimal places and enter it without dollar sign.

You opened a margin account with borrowing $50,000 from your broker a year ago. Your account started at the initial margin requirement of 50%. With the margin account you bought ABC stock at $50 per share. The maintenance margin is 35%. Today, the stock price falls to $45 per share. Assume interest rate is 10%. What is the margin (your equity) in your account when you first purchase the stock? Will you receive a margin call? (Please consider interest expenses and Show percentage margin after price falls) How low can the price of ABC shares fall before you receive a margin call? Please show both with and without interest expenses. What is your rate of return (Consider Interest Expenses)?

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $47 per share.   Required: a. How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position?     b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position?

You have $10,000 and you decide to borrow an additional $10,000 from your broker (the maximum allowed with an initial margin requirement of 50%) to buy as much Merck stock as you can at its current price of $100 per share. If the maintenance margin is 30%, what would the price of Merck have to fall to before you get a margin call?

You are selling short 1000 shares of company A, which is currently selling its shares for $100/share. This company is paying a dividend of 0.8$ per share. The initial margin is 50%. Set the initial balance sheet. • Set the balance sheet in case the price goes up 20% If the maintenance margin is 40%, how much can the price increase before the investor would get a margin call? What will be the rate of return if the price of the stock fell to 90$? What will be the rate of return in case the price increases to 120$?