Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C
splits two-for-one in the last period.
A
B
C
Po
98
58
116
Rate of return
90
100
200
200
P1
103
53
126
Rate of return
b. An equally weighted index
Required:
Calculate the first-period rates of return on the following indexes of the three stocks: (Do not round intermediate calculations. Round
your answers to 2 decimal places.)
a. A market value-weighted index
%
01
100
200
200
%
P2
103
53
63
Q2
100
200
400
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Transcribed Image Text:Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. A B C Po 98 58 116 Rate of return 90 100 200 200 P1 103 53 126 Rate of return b. An equally weighted index Required: Calculate the first-period rates of return on the following indexes of the three stocks: (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. A market value-weighted index % 01 100 200 200 % P2 103 53 63 Q2 100 200 400
Both a call and a put currently are traded on stock XYZ; both have strike prices of $60 and expirations of six months.
Required:
a. What will be the profit/loss to an investor who buys the call for $4.15 in the following scenarios for stock prices in six months? (Loss
amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
Stock Price Profit/Loss
$
$
GA
$
GA
b. What will be the profit/loss in each scenario to an investor who buys the put for $7.00? (Loss amounts should be indicated by a
minus sign. Round your answers to 2 decimal places.)
Stock Price
$
$
GA
50
55
60
65
70
GA
A
50
55
60
65
70
Profit/Loss
expand button
Transcribed Image Text:Both a call and a put currently are traded on stock XYZ; both have strike prices of $60 and expirations of six months. Required: a. What will be the profit/loss to an investor who buys the call for $4.15 in the following scenarios for stock prices in six months? (Loss amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Stock Price Profit/Loss $ $ GA $ GA b. What will be the profit/loss in each scenario to an investor who buys the put for $7.00? (Loss amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Stock Price $ $ GA 50 55 60 65 70 GA A 50 55 60 65 70 Profit/Loss
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