When can American put options be exercised? () A. Only on the expiry date B. On or before the expiry date C. Only after dividends are distributed D. At any moment in the future
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- Question 5: Suppose that a March call option to buy a share for $50 costs $2.50 and is held until March. Under what circumstances will the holder of the option make a profit? Under what circumstances will the option be exercised? Draw a diagram showing how the profit on a long position in the option depends on the stock price at the maturity of the option.Plz explain itQuestion 1 Help = 1. Find the expected profit for a holder of a European call option with K = 94 to be exercised in six months if the stock price at maturity is ST (90, 96, 98) with probabilities p = (1, 1, 1), given that the option is bought for Co= 10 financed by a loan at the interest rate of 10% (per annum).mported from Chr... Financial Markets i 33 Multiple Choice $87 Kumapy If the interest rate is 7 percent, then the present discounted value of $100 to be received two years from now is closest to $127 Saved
- QUESTION 30 Johnson & Johnson (ticker:JNJ) is traded at $172.21 per share when Nancy sold a call option today. The call premium is $3.05 and the exercise price is $180 The option will be expired on Jan. 20, 2024. a. What is Nancy's expectation about JNJ's price between now and expiration date? Also, state reasons why sellling a call is beneficial given her expectation of the price movement. b. What are Nancy's maximum profit and maximum loss? c. Show the profit/loss if, at the expiration date, the JNJ price is (1) $150, (2) $182, (3) $190. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph ABC ✔ ✓ Π "Ω Θ Arial 田く HH = 10pt 田田田 Ev A V 田旺图 † {} Ix ४ Gô Ky Q5 + ≡≡≡≡ € € X² X₂ & >ITQuestion A Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $50.00, = 0.20, r = 0.06 and the dividend yield = 3.5%. What is the lowest strike price where early exercise would occur with an American put option? ........Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line.Question 4 Consider the following: your purchased a put option on JPM two months ago, with a strike price for the option of $138, and the option expires today. Show work for all parts requiring computation. Suppose the stock price is $152. What is the exercise value? In general, how is the value of a put option affected by time (+/-/None), underlying asset volatility (+/-/None), and the current asset price (+/-/None)?
- Basic Option Strategies Profit Computation Assume the below prices for calls and puts: Call Put Strike Jul Aug Oct Jul Aug Oct 165 2.7 5.25 8.1 2.4 4.75 6.75 170 0.8 3.25 6 5.75 7.5 1. Buy one August 170 call contract. Hold it until expiration. lIdentify the breakeven stock price at expiration. What is the profit/loss if ST=190? What is the maximum profit? 2. Buy one October 165 put contract. Hold it until the options expire. Identify the breakeven stock price at expiration. What is the Maximum possible loss from the transaction? What is the profit/loss if ST=185v Question Completion Status: QUESTION 1 Mr. A has to recive 5000 Euro after six month from a trader in Europe and he fear that the exchnage rate might change in this period. What can be done to manage this risk? O 1. Insurance O 2. Retention O 3. Options contract O 4. Both Insurance and retention QUESTION 2 A trader in Madina Munnawara produces dates and sells in the market. He fears that the prices of Dates might drop by the time the crop is ready for sale. he can use the following method to manage this risk. 1. Retention 2. None of these 3. Non-insurance transfer O 4. Insurance Save Al Click Save and Submit to save and submit. Click Save All Answers to save all answers. DEQuestion 1 • Springtime Insurance Brokers Ltd. (SIBL) stock is currently selling for $42. A put option on the stock with a value of $3 has an exercise price of $40 and 6 months until expiration. To prevent arbitrage opportunities, what should be the value of a call option with the same strike price and expiration date? Assume that the options are European and that the effective annual risk-free rate is 6%.
- Q.20 The risk manager of a large investment bank is reviewing the bank's investments in options contracts. He is particularly interested in call options contracts on shares of Hamilton Invest that the bank bought a few months ago. Hamilton Invest just unexpectedly announced that they would pay a USD 3 dividend per share in the sixth and twelfth months. The risk manager is concerned with the impact of dividends on the option's price. The risk- free rate is 5%, and the option has the following characteristics: A By how much will the price of the options change after the announcement of the dividends? Assume that N(d,) before and after the announcement of the dividend is 0.7654 and N(d₂) before and after the announcement of the dividend is 0.5489? B Strike price Expiration Underlying's Price Annual volatility The price of the option will increase by USD 3.32 USD 140 13 months USD 151 35% The price of the option will decrease by USD 3.32Basic Option Strategies Profit Computation Assume the below prices for calls and puts: Call Put Strike Jul Aug Oct Jul Aug Oct 165 2.7 5.25 8.1 2.4 4.75 6.75 170 0.8 3.25 6 5.75 7.5 9 Buy one August 170 call contract. Hold it until expiration. Identify the breakeven stock price at expiration. What is the profit/loss if ST=190? What is the maximum profit? Buy one October 165 put contract. Hold it until the options expire. Identify the breakeven stock price at expiration. What is the Maximum possible loss from the transaction? What is the profit/loss if ST=185What is the appropriate risk-free rate on May 11, 2022 for an option that expires on Oct 20, 2022 if the T-bill with closest maturity is quoted as 3.65/3.44? a. What is the un-annualized discount rate? Round your answer to two decimals. b. What is the T-bill price? Round your answer to two decimals b . What is the approximate risk-free rate? % Round your answer to two decimals