2. An investor sells a European call on a share of $5. The stock price is $45 and the strike price is $52. Fill the table and answer 国 Stock price (ST) in the $35 $40 $45 $47 $50 $52 $55 $60 market Option value (Pay off) Premium Profit a) Under what circumstances does the investor make a profit? b) Under what circumstances will the option be exercised? c) What is the maximum loss an investor can incur?

None

Suppose you inherit $100,000 at age 25 and immediately invested in a growth fund who’s annual rate of return average is 13%. Five years later, you transfer all proceeds from the scrubs fun into a long-term IRA that pays an average annual rate of 8%. Immediately you start making additional contributions of $7000 per year to the same IRA. Assuming continuous interest, steady interest rates, and a perfect record of making annualcontributions, how much is this IRA worth when you reach the age of 65? The formula that will need to be used is A = P e^r*t + D/r (e^r*t - 1). Hint: use the continuous interest formula to find the accumulated amount for the first five years, which is then the annual investment, P, into the IRA. 

Please answer question 4-b

Use the binomal option pricing model to estimate the Call price.               Stock price (S)  $120.00            Stock price up (Su)  $170.00            Stock price down (Sd)  $50.00            Strike price (K)  $120.00            rf 1.0%                                       Call price up (Cu)             Call price down (Cd)                           D             PV(B)                           Call price (C)

(15) The is the stock price minus exercise price, or the profit that could be attained by immediate exercise of an in-the-money call option. *A) intrinsic value B) time value C) stated value D) discounted value

Please advise

Whats the profit of the "Bearish Put Spread" when stock price is $25, $30, $35, $40, $45, $50, $55, $60, and $65 respectively? Given:  - Stock price = $45.00 - Current option price = 7.0 (put 35) - Current option price = 2.0 (put 45) - Exercise Price = $40.00

b) Suppose you are given the following information: Current market price of a share= R200 000 Option’s exercise price = R300 000 Time until the option expires= 5 yrs Risk free rate =4% Standard deviation of the returns on the share= 0.35 Required: i. Calculate d1 and d2 ii. Suppose N(d1) =0.7517 and N(d2) =0.4602; calculate the price of the call option on the share

Please answer question 4-c