Kyle sold 2 one-year European $25 call and 3one-year European $22 put on Janssen stock. The call price per share is $0.70 and the put price per share is $1.80. What will be the net profit on these option positions if the stock price is $23 on the day the options expire? Ignore trading costs and taxes. A) -540 B) 680 C) 140 D) 540 E) 0

Kyle sold 2 one-year European $25 call and 3one-year European $22 put on Janssen stock. The call price per share is $0.70 and the put price per share is $1.80. What will be the net profit on these option positions if the stock price is $23 on the day the options expire? Ignore trading costs and taxes. A) -540 B) 680 C) 140 D) 540 E) 0

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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Accounting Let there exist a non-dividend-paying stock, A, which has a current price of $80. Let there exist another stock, B, which has a current price of $100. Stock B will continuously pay dividends at a dividend yield of x. A one-year European exchange call option with underlying asset A and strike asset B is sold for $5, while a one-year European exchange put option with underlying asset A and strike asset B is sold for $15. 12% is the continuously compounded, risk-free interest rate. Calculate the value of stock B's dividend yield, x.
2 1. An investor buys a European put on a share of $4. The stock price is $45 and the strike price is $42. Fill the table and answer. $45 $50 Stock price (ST) in the market $30 Option value (Pay off) Premium Profit $40 $42 $55 a) Underwhat circumstances does the investor make a profit? b) Underwhat circumstances will the option be exercised? c) What is the maximum profit an investor can make if he/she buys this put option?
III.Determine the total transaction fee of each stock investment when it will be sold. Complete the table below and round off your answer to the nearest hundredths. Fees Gross Trade Amount Computation 1000 shares x P217.75 Amount P (13) less Broker's Commission Value Added Tax PSE transaction fee 0.0025 x P 217, 750 (15). (17). (19). (21). (14). (16). (18) _(20). (22), _(23). 0.12 x P 0.00005 x P Clearing Fee Sales tax 0.0001 x P 0.005 x P Total
D6) Finance the stock of apsara ltd is currently trading at a price of 500 another stock reynolds ( with similar cost of equity i .e., 20%) is trading at 400 per share. If the current divident per share paid by both reynolds and apsara is the same, then what would be the reasons behind the diffrence in stock prices of both these companies. explain your answer with adequate rationale
A non-dividend-paying stock is currently worth $59. A forward contract on the stock expires in 0.9 years. The T-bill rate is 7% (continuously compounded) for all maturities. Part 1 What is the forward price? Correct ✓ F0=S0erT�0=�0�� = 59e0.07⋅0.959�0.07⋅0.9 = 62.84 Part 2 What is the value of the forward contract to the long? Part 3 10 days later, the stock has fallen to $52.31. What is the new forward price? Part 4 What is the value of the forward contract to the long?
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 Stock price (S,) in the $35 $40 $45 $47 $50 $52 $55 $60 market Option value (Pay off) Premium Profit a) Underwhat circumstances does the investormake a profit? b) Underwhat circumstances will the option be exercised? c) What is the maximum loss an investorçan incur?
Mf2. Company A is currently selling for $130 per share and has earnings of $13 per share. Company B is privately held with no market price and has earnings of $7 per share. Based on a P/E multiples valuation, what would be the expected price of a share of Company B stock? a. $91 b. $63 c. $70
5. Shares in Rugby plc, a non-dividend-paying company, are trading at £7.50. A one-year European call option on Rugby plc stock with strike price £8.00 has a risk-neutral probability of exercise equal to 40%. Explain what this implies about the risk-neutral probability of exercise for a one-year European put option on Rugby plc with strike price £8.00. *
D6) Finance Your Beloved Machine’s current stock price is $90. YBM December 100 calls trade for $6. a. Adjust the options prices and terms of the contract for a 4:1 split. b. Adjust the options prices and terms of the contract for a 3:2 split
Q1 - What is the price of European call option on same stock, same expiry and same strike price. Q2 - Explain arbitrage opportunities if European call price is $4.10 and 7.50. How much will arbitrage profit be for each? European put costs - $2.35 Expires in 6 months Strike = $100 %3D SO = $104 Dividend = $2 expected in 2 months Rf=5% (comp cont)
Suppose XYZ stock pays no dividends and has a current price of $50. The forward price for delivery in 1 year is $55. Suppose the 1-year eective annual interest rate is 10%. (a) Graph the payo and prot diagrams for a forward contract on XYZ stock with a forward price of $55. (b) Is there any advantage to investing in the stock or the forward contract? Why? (c) Suppose XYZ paid a dividend of $2 per year and everything else stayed the same. Now is there any advantage to investing in the stock or the forward contract? Why?
Question A .The price of an American call on a non-dividend-paying stock is $4. The stock price is $31, the strike price is $30, and the expiration date is in 3 months. The risk-free interest rate is 8%. The upper and lower bounds for the price of an American put on the same stock with the same strike price and expiration date is $3.00 and $2.41, respectively. Explain carefully the arbitrage opportunities if the American put price is greater than the calculated upper bound. 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

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