This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: A call option on 100 shares of stock is purchased for a premium of $400. The current price of the ... (Read 286 times)

jilianpiloj

  • Hero Member
  • *****
  • Posts: 521
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
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by jilianpiloj on Apr 14, 2019

frejo

  • Sr. Member
  • ****
  • Posts: 349
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.
Answer Preview
Only 25% of students answer this correctly


jilianpiloj

  • Hero Member
  • *****
  • Posts: 521
Reply #2 on: Apr 14, 2019
Thanks


frejo

  • Sr. Member
  • ****
  • Posts: 349
Reply #3 on: Apr 14, 2019
Welcome :)


« previous next »
 

Did you know?

The immune system needs 9.5 hours of sleep in total darkness to recharge completely.

Did you know?

Your chance of developing a kidney stone is 1 in 10. In recent years, approximately 3.7 million people in the United States were diagnosed with a kidney disease.

Did you know?

Elderly adults are living longer, and causes of death are shifting. At the same time, autopsy rates are at or near their lowest in history.

Did you know?

The first monoclonal antibodies were made exclusively from mouse cells. Some are now fully human, which means they are likely to be safer and may be more effective than older monoclonal antibodies.

Did you know?

Walt Disney helped combat malaria by making an animated film in 1943 called The Winged Scourge. This short film starred the seven dwarfs and taught children that mosquitos transmit malaria, which is a very bad disease. It advocated the killing of mosquitos to stop the disease.

The recently discovered lleret calvaria from Kenya is the smallest H. erectus and shares many traits The recently discovered lleret calvaria from Kenya is the smallest H. erectus and shares many traits
When the exhaust is lean, the PCM applies a positive current into the pump cell. When the exhaust is lean, the PCM applies a positive current into the pump cell.
Noid lights are usually purchased as an assortment so that one is available for any type or size ... Noid lights are usually purchased as an assortment so that one is available for any type or size ...
Gulf Stream/North Atlantic Current Gulf Stream/North Atlantic Current
What is the current flowing through the resistor? What is the current flowing through the resistor?
Find the voltage, current and power for each resistor in the circuit below Find the voltage, current and power for each resistor in the circuit below
Video: Sickle Cell Anemia

For a complete list of videos, visit our video library