This topic contains a solution. Click here to go to the answer

Author Question: You have $10,000 to invest and you are considering short selling shares of Oceanic Airlines or ... (Read 267 times)

a0266361136

  • Hero Member
  • *****
  • Posts: 538
You have $10,000 to invest and you are considering short selling shares of Oceanic Airlines or purchasing 10 put options on the shares. The stock price is currently $100. If you short sell, then your broker requires you to deposit 50% margin into your brokerage account. So, you can afford to short sell 200 shares of Oceanic. The proceeds will be deposited in your account and you will have to deposit an additional $10,000 of margin. The put option expires in six months, has a strike price of $100 and has a premium of $10 (per share). Assume that the stock price falls to $75 by the option expiry date. What is the ratio of the rate of return on the puts over the return on the short sale? In the case of the short sale, treat your margin deposit as your investment.
◦ -10.00
◦ 1.00
◦ 3.00
◦ 5.00


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a0266361136 on Apr 25, 2021

Swizqar

  • Sr. Member
  • ****
  • Posts: 357
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 55% of students answer this correctly




a0266361136

  • Member
  • Posts: 538
Reply 2 on: Apr 25, 2021
Great answer, keep it coming :)


amcvicar

  • Member
  • Posts: 341
Reply 3 on: Yesterday
:D TYSM

 

Did you know?

Though the United States has largely rejected the metric system, it is used for currency, as in 100 pennies = 1 dollar. Previously, the British currency system was used, with measurements such as 12 pence to the shilling, and 20 shillings to the pound.

Did you know?

Adult head lice are gray, about ? inch long, and often have a tiny dot on their backs. A female can lay between 50 and 150 eggs within the several weeks that she is alive. They feed on human blood.

Did you know?

Amoebae are the simplest type of protozoans, and are characterized by a feeding and dividing trophozoite stage that moves by temporary extensions called pseudopodia or false feet.

Did you know?

Signs and symptoms that may signify an eye tumor include general blurred vision, bulging eye(s), double vision, a sensation of a foreign body in the eye(s), iris defects, limited ability to move the eyelid(s), limited ability to move the eye(s), pain or discomfort in or around the eyes or eyelids, red or pink eyes, white or cloud spots on the eye(s), colored spots on the eyelid(s), swelling around the eyes, swollen eyelid(s), and general vision loss.

Did you know?

Carbamazepine can interfere with the results of home pregnancy tests. If you are taking carbamazepine, do not try to test for pregnancy at home.

For a complete list of videos, visit our video library