1. Swenson Markets would like to sell an additional 1,000 shares of stock using a Dutch auction. The bids received are as follows: (Table below should be interpreted as follows: Bidder A is willing to pay $31 for each share, up to 100 shares while bidder B is willing to pay $29 for each share, up to 100 shares) (Hint: Remember that for Dutch auctions, sell shares first to bidder with willing to pay the highest price and then to bidder with second highest price and so on until all shares are sold. However, every bidder will pay the price of the last bidder to receive any shares. In other words, everyone will pay the lowest price of all successful bidders receiving shares regardless of their own price bids.) Bidder Price A B с 500 D 600 E 400 What is the total amount the issuer will receive from this auction? Ignore costs. Quantity 100 100 $31 $29 $28 $27 $26

1. Swenson Markets would like to sell an additional 1,000 shares of stock using a Dutch auction. The bids received are as follows: (Table below should be interpreted as follows: Bidder A is willing to pay $31 for each share, up to 100 shares while bidder B is willing to pay $29 for each share, up to 100 shares) (Hint: Remember that for Dutch auctions, sell shares first to bidder with willing to pay the highest price and then to bidder with second highest price and so on until all shares are sold. However, every bidder will pay the price of the last bidder to receive any shares. In other words, everyone will pay the lowest price of all successful bidders receiving shares regardless of their own price bids.) Bidder Price A B с 500 D 600 E 400 What is the total amount the issuer will receive from this auction? Ignore costs. Quantity 100 100 $31 $29 $28 $27 $26

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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A stock market speculator can choose between (i) buying 1000 shares ofa certain stock for $80 per share, and (ii) buying 10, 000 European-stylecall options on the stock with a strike price of $90 for $8 per option.Which of the following is true? For choice (ii) to give a better result whenthe option matures, the share price must be above:
Given the following data, show the profit from a strategy involving a straddle for the put, call and combined position. The price of a European call and put option are $5 and $6 respectively. Both of the options have a strike price of $30. Explain why a trader might be willing to enter into a straddle. Please show all work. Please use four decimal places for all calculations.
23) Dumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is currently trading at R25 per share. Dumo decides to take a long position in at- the money put option and simultaneously buys one share of UFSI stock. The put option expires in 3 months' time and costs R2.5 per share. Assume a contract consists of one put option. Required: a) Identify the strategy employed by Dumo above. b) Tabulate the Profit to the strategy at expiration for the following i. Exercise price R30; Stock price 20. i. Exercise price R30; Stock price 35.
Consider the following limit order book. Limit buy order: Price Size 84.77 200 84.76 100 84.75 400 Limit Sell Order Price Size 84.79 100 84.80 300 85.70 700 If you submitted a market sell order for 400 shares, how much would you receive?
i need the answer quickly
A company's stock is currently valued at £40 on the London Stock Exchange. Four European call options on this stock are priced at £10, £4, £5.5 and £1, respectively. These have strike prices of £30, £50, £40, £60. Is there arbitrage here ? O YES NO
V3. Which of the following statements about IPO is correct? O In a market without agency problem, Dutch auction is the worst among the three IPO methods in terms of finding out the best reservation price of the IPO shares • In a firm commitment cash offer, the underwriter would buy the whole issue from the issuer, and then sell the issue to the market. O Best efforts cash offer is the most popular IPO method in the US market. • In the best efforts cash offer, a firm would have to continue the issuance even if the demand does not meet their expectation.
A speculator can choose between (i) buying 108 shares of a stock for $50.58 per share, and (ii) buying 1080 European call options on that stock with a strike price of $42 for $3.99 per option. At maturity, what is the stock price that would make the two alternatives equally profitable? a. 1.58 O b. 42.81 O c. 47.57 d. 45.96 e. 14.18
Please answer question 4-c
Mr. John Barker, who is a market maker at CBOE, notices the following quotes in his hand-held device. The price of Macrohard stock is $66 per share. The European call option on the stock, with strike price $70 and expiration date in six months, is quoted for $4 per share. The European put option on the same stock, with the same strike price and the same expiration date, is quoted for $5.5 per share. A dividend of 50 cents is expected in two months. The interest rate is 5%. A. Is there an arbitrage opportunity to Mr. John Barker? How much is the arbitrage profit per share of the stock? B. Describe your arbitrage strategy in words and then use a table to show the cash flows of your arbitrage strategy.
4. AUCTIONS. Consider an auction where bidders have independent private values. Each bidder perceives that valuations are evenly distributed between $1 and $10. Sam knows her own valuation is $9. Determine Sam's optimal bidding strategy in a) A first-price, sealed-bid auction with four bidders b) A Dutch auction with eight bidders c) A second-price, sealed-bid auction with 10 bidders
I want help with an example we got from our textbooks that needs to be done in preparation for our test later this week. I am very confused in terms of what to do and would apreciate some help Dumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is currently trading at R25 per share. Dumo decides to take a long position in at-the money put option and simultaneously buys one share of UFSI stock. The put option expires in 3 months’ time and costs R2.5 per share. Assume a contract consists of one put option. Required: Identify the strategy employed by Dumo above. Tabulate the Profit to the strategy at expiration for the following Exercise price R30; Stock price 20. Exercise price R30; Stock price 35.

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