1 If you buy a call option for $15 on a stock priced currently at $80 and the strike prices is $82, is the option: A)In the money B)Out of the money C)Show me the money D)At the money   2 A certain company has expected next year earnings per share of $6. If the company wants to reinvest 60% of earnings into the firm, and the firm has an ROE of 10%. What is the current firm value if the firm has a required rate of return k=8%?

Q: Marta requires a 15.9% return from their investment. The company recently announced that it will pay…

A: We have to use the dividend growth formula to calculate the fair price. Price = next…

Q: Assume that the current stock price is 100 on a non-dividend paying stock, and the quoted three…

A: Strike price: It is the price at which the stock option is exercised. It means the price at which a…

Q: You decide to enter a short-selling strategy with 100 shares. The current price is $70, initial…

A: The objective of this question is to determine the price that would trigger a maintenance call in a…

Q: You are bullish on Unum stock.  The current market price is $50 per share, and you have $4,000 of…

A: calculate gain and interest amount

Q: Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the…

A: The rate of return refers to the amount that the company provides over and above the amount invested…

Q: Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the…

A: The objective of the question is to calculate the rate of return for each of the three investment…

Q: An investor is bullish in XYZ stock. He decides to buy on margin 1,000 shares at market price of…

A: Initial price=$50Maintenance margin=30%Initial margin=60%What should be margin call price.

Q: You invest $10,000 in a long position in a stock priced at $44 per share. Intial margin is 70% and…

A: A margin call is made by the broker to the investor asking them to deposit an extra amount in their…

Q: You are told by your investment advisor that Laduma Co. is expected to earn R5 per share next year,…

A: Formulas:

Q: Suppose you believe that National Inc.’s stock price is going to decline from its current level of…

A: Put Option: It is the contract where a right is provided to the owner to sell a  certain amount of…

Q: Currently you own no stock or options.  Today's data for Green Corporation, where the call and put…

A: A put option would be exercised if the price of the stock at the time of expiration of the put…

Q: Don't provide handwritten soluton.   You are bullish on Telecom stock. The current market price is…

A: Trading on margin is a financial strategy where an investor borrows funds from a broker to purchase…

Q: Assume the risk free rate is 4% and the beta for a particular firm is 2, current firm share price is…

A: in this problem we have to calculate growth rate of firm and than calculate next year price.

Q: You are thinking of purchasing a cumulative, convertible preferred share with a stated dividend of…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: You would like to be holding a protective put position on the stock of XYZ Company to lock in a…

A: Value of share = $210It can increase by 10% or decrease by 10%T-bill rate or risk-free rate = 4%If…

Q: GM has promised an annual dividend of $1.45 starting next year. This dividend will be paid until the…

A: Fair price of stock = Present value of the future dividends + Present value of the terminal…

Q: Please answer correctly Do not give the wrong answer by answering each column appropriately

A: Step 1: a: Invest all $10,000 in the stock (100 shares) 1. Price of stock = $80: Value of stocks:…

Q: Suppose the stock of Company J pays no dividends and has a current price of $90.00. The forward…

A: Profit = Forward price - Stock price at expiry.Forward price = $93.60Stock price at expiry = 109.80

Q: Big Oil, Inc. has a preferred stock outstanding that pays a $9 annual dividend. If investors'…

A: Annual dividend (D) = $9 Required return (r) = 0.10 Required return declines to (r1) = 0.08   We…

Q: uppose you are bullish on stock SPYR. It is trading at $388.55 on September 19, 2022, but you…

A: When prices go below certain limits then there is a margin call to deposit money with a broker.

Q: A stock currently trades at 5100. In one month its price will either be $125, $100, or $75. I sell…

A: The option is the financial derivative that provides the right to buy or sell the underlying asset…

Q: You took a long position in a call option on DBS’s share. The option premium is $7 per contract and…

A: Long Position in call  Premium Paid =$7 at Strike or exercise price is $25.  The call option is…

Q: 6. The ABC Company has to make a choice between two strategies: Strategy 1: Is expected to result…

A: Market price: It is the current rate which is in market.

Q: You happen to be checking the newspaper and notice an arbitrage opportunity. The current stock price…

A: The put-call parity theorem explains a relationship between the price of put and call options of the…

Q: Assume we are in July, 2023. In July of 2023, the share prices of company B are $80 per share. You…

A: An option is a derivative instrument which gives the buyer the right but not the obligation to…

Q: Assuming you have a margin account verage you wish to sell short a stock currently priced at $25 per…

A: Given that             Leverage  Ratio =1.76           Stock Price =$ 25 per share           Equity…

Q: Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the…

A: Stock Price: This is the current price of the stock, denoted as S0​, which is $80 in this…

Q: Required: a. How much would it cost to purchase if the desired put option were traded? (Do not round…

A: Value of share = $110 It can increase by 5% or decrease by 5% T-bill rate or risk-free rate = 4% If…

Q: broker requires a 30% maintenance margin, at what share price will you be subject to a margin call?…

A: First we need to determine the margin % using the formula below:

Q: Graph the profits and losses associated with writing a call option on a security with a strike price…

A: Given Strike price =$60 and Premium of $5.

Q: Assume we are in July, 2023. In July of 2023, the share prices of company B are $80 per share. You…

A: Put option refers to the contract in which the obligation is not provided but the right of the…

Q: You own a call option on Intuit stock with a strike price of $39. When you purchased the option, it…

A: Data  given: Strike price                                = $39 Cost of option( premium paid) = $7…

Q: A bank has just sold a call option on 500,000 shares of a stock. The strike price is 40; the stock…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: Suppose you have $60,000 to invest. You're considering Miller-Moore Equine Enterprises (MMEE), which…

A: When considering an investment, evaluating different avenues for potential returns is essential.…

Q: The current price of a non-dividend-paying stock is $30. Over the next six months it is expected to…

A: Call option is a contract which gives buyer the right, but not an obligation to purchase the…

Q: Assume that a firm can issue preferred stock that has a $70 par value and pays a 15.0% annual…

A: The expenses related to offering new securities, such as common stock or bonds, to the general…

Q: You have been watching Anglo Platinum (JSE: AMS) and believe that the share price should increase…

A:

Q: What is the price of a one-month European call option given the following information: the exercise…

A: Option Market is the stock market Strategy. under which investor will not purchase the share of that…

Q: ou would like to be holding a protective put position on the stock of XYZ Company to lock in a…

A: Protective put options are the shield provided to the owner of the stocks to ensure the selling…

Q: You own a put option on Ford stock with a strike price of $14. When you bought the put, its cost to…

A: Given: Particulars Amount Strike price 14 Stock trading 9 Stock trading 25 Period 6…

Q: National Corporation is considering buying common shares in ABC Corporation. National Corporation…

A: Given: Expected dividend = P400 Risk free rate = 7.5% Beta = 1.75 Market return = 11.3% Growth rate…

Q: You would like to be holding a protective put position on the stock of XYZ Company to lock in a…

A: Value of share = $210It can increase by 10% or decrease by 10%T-bill rate or risk-free rate = 4%If…

Q: You shorted a call option on Intuit stock with a strike price of $34. When you sold (wrote) the…

A: Call option:A call option is a fiscal tool granting people the chance to buy an asset at a destined…

Q: You think that there is an arbitrage opportunity on the market. The current stock price of Wesley…

A: Put-call parity is used to find out the actual price of the options that have the same…

Q: Assume we are in July, 2023. In July of 2023, the share prices of company B are $80 per share. You…

A: Market Price at Expiry: $100 per shareStrike Price of Put Options: $60 per sharePremium per Put…

Q: Suppose you think AppX stock is going to appreciate substantially in value in the next year. Say the…

A: An option refers to a derivative instrument that provides its holder the choice of buying or selling…

Q: Suppose you believe that  BVC Inc.’s stock price is going to decline from its current level of…

A: Put option is that option under which trader will earn the profit when the share price will decline…