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Author Question: A call option on 100 shares of stock is purchased for a premium of $400. The current price of the ... (Read 159 times)

jilianpiloj

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on: Apr 14, 2019

Question 1

An investor purchases 100 shares of stock for $20 per share. The stock has now risen in price to $44 per share. To cover potential losses, the investor purchases a put option for a premium of $300 with an exercise price of $42 per share. The stock falls to $28 per share, and the investor exercises the option and sells the shares at $42 per share. Ignoring brokerage commissions and taxes, what would be the investor's return from the stock?


◦ 120%
◦ 110%
◦ 95%
◦ 70%

Question 2

A call option on 100 shares of stock is purchased for a premium of $400. The current price of the stock is $42 per share, and the exercise price is $44 per share. The option is exercised when the stock is selling for $50 per share. What would be your return on the option if after exercising it, you immediately sold the stock at the market price of $50 per share? Ignore taxes and brokerage commissions.


◦ 8%
◦ 12%
◦ 50%
◦ 200%
Personal Finance ¦ Madura ¦ 6th Edition
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Marked as best answer by jilianpiloj on Apr 14, 2019

frejo

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Reply #1 on: Apr 14, 2019
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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jilianpiloj

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Reply #2 on: Apr 14, 2019
Thanks


frejo

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Reply #3 on: Apr 14, 2019
Welcome :)


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