61. For an option fee of $6,000, a seller provided an option to a buyer for 90 days to purchase the property for $100,000. However, during the option period, the seller decides not to go ahead with the deal. What will occur next? O The seller gets to keep the $6,000. O The seller must notify the buyer before walking away from the deal. O The seller should notify their agent in-writing. • The seller must follow through with the deal as per the options contract

61. For an option fee of $6,000, a seller provided an option to a buyer for 90 days to purchase the property for $100,000. However, during the option period, the seller decides not to go ahead with the deal. What will occur next? O The seller gets to keep the $6,000. O The seller must notify the buyer before walking away from the deal. O The seller should notify their agent in-writing. • The seller must follow through with the deal as per the options contract

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Emma purchased 10 call option contracts on Vergara stock with a strike price of $20 when the option was quoted at $0.78. The option expires today when the value of Vergara stock is $19.45. Ignoring trading costs and taxes, what is the net profit on this investment? A) $0 B) -780 C) 2000 D) -78 E) 78
2. On January 1, 2022, ABC Corporation entered into a 60-day put option contract for $30,000. Based on the PHP-USD rates below, what is the intrinsic value of the contract on Mar. 2, 2022? January 1, 2022 Spot Rate 30-day Forward Rate 60-day Forward Rate January 30, 2022 Spot Rate 30-day Forward Rate 60-day Forward Rate Mar. 2, 2022 Spot Rate 30-day Forward Rate 60-day Forward Rate Buying Rate 55.10 55.41 55.93 Buying Rate 55.38 55.71 56.04 Buying Rate 55.88 55.93 55.95 Selling Rate 55.67 55.43 55.96 Selling Rate 55.75 56.17 56.61 Selling Rate 55.73 55.79 55.82
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You purchase one Virgin Galactic March 120 put contract (equalling 1000 shares) for a put premium of $10. You hold the option until the expiration date, when Virgin Galactic stock sells for $123 per share. a) How much is the realized profit/loss on the transaction? b) What is the maximum profit that you can realize on this position? c) What is biggest loss that you can suffer on this position? d) What is the realized profit/loss of your counterparty (the buyer of this call option)? Please briefly explain the calculations as well, thanks!
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