DO NOT GIVE SOLUTION IN IMAGE FORMAT 139. On January 1st, 20x12, ABC Inc. agrees to a futurescontract to buy 1,000 shares of DEF Inc. for $20 per share in60 days. The current value of the shares on January 1, 20x12is $22 per share.The broker requires a 20% margin payment. The fair value ofthe shares is $24 per share on January 31st, 20x12 and $18 pershare on February 29th, 20x12.Required: Prepare all relevant journal entries.

Accounting for Derivative Instrument Future is a derivative which is contract and value which is…

Answered: 139. On January 1st, 20x12, ABC Inc.…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 14P

See similar textbooks

Similar questions

On 1 May 20X4 XYZ invests in 110 call options for Fantasy Travel Limited shares. The options have an exercise price of $59 per share and will expire on 30 April 20X6. Price for each option is $9. Fantasy Travel Limited’s shares price on 1 May 20X4 is $63. The balance sheet date for XYZ Ltd is 30 June. XYZ Ltd accounts for its financial instruments using fair value through profit and loss. Other data Date Share Price Option Price 30 June 20X4 67 20 30 June 20X5 82 24 What is the value of the options on 30 June 20X5?
N1. Account
36. Subject : - Accounting
On January 1, 2022, Mills Corp. purchased a call option on shares of XYZ stock. Terms of the contract were as follows: Number of shares: 100 . Strike price: $120 per share Expiration date: April 30, 2022 Total cost of the option contract paid at signing: $90 .Seller of the option contract: First Investment Bank On January 1, 2022, XYZ stock was trading at $120 per share. The following additional information is known: . On March 31, 2022, the price of XYZ stock was $140 per share. A market appraisal indicated that the time value of the option contract was $70. . On April 5, 2022, the price of XYZ stock was $135 per share. A market appraisal indicated that the time value of the option contract was $60. On this date, Mills settled the option contract. Required: 1. Indicate any amounts that Mills Corp. would have included in its March 2022 quarterly financial statements related to the option contract. ed Complete this question by entering your answers in the tabs below. Req 1 Indicate any…
On January 2, 2020, Ayayai Company purchases a call option for $310 on Merchant common stock. The call option gives Ayayai the option to buy 1,090 shares of Merchant at a strike price of $49 per share. The market price of a Merchant share is $49 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $53 per share, and the time value of the option is $200. Prepare the journal entry to record the purchase of the call option on January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 enter an account title to record the transaction on January 2, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction on January 2, 2020 enter a debit…
On 1 May 20X4 XYZ invests in 18456 call options for Fantasy Travel Limited shares. The options have an exercise price of $100 per share, and will expire on 30 April 20X6. Price premium for each option is $25. Fantasy Travel Limited's shares price on 1 May 20X4 is $132. The balance sheet date for XYZ Ltd is 30 June. XYZ Ltd accounts for its financial instruments using fair value through profit and loss. Other data: Date 30 June 20X4 30 June 20X5 30 April 20X6 Share Price 146 131 150 Option price 34 24 43 What is the value of the options at the time when XYZ Ltd exercises the options on 30 April 20X6? PLEASE ENTER YOUR ANSWER IN WHOLE NUMBERS WITH NO COMMAS OR DOLLAR SIGNS (EG $1,000,000 SHOULD BE SHOWN AS 1000000; -$1,000,000 SHOULD BE SHOWN AS -1000000).
2
Hh.141.
Solve given question?
On January 1, 2022, Mills Corp. purchased a call option on shares of XYZ stock. Terms of the contract were as follows: • Number of shares: 100 • Strike price: $120 per share • Expiration date: April 30, 2022 •Total cost of the option contract paid at signing: $90 • Seller of the option contract: First Investment Bank On January 1, 2022, XYZ stock was trading at $120 per share. The following additional information is known: . On March 31, 2022, the price of XYZ stock was $140 per share. A market appraisal indicated that the time value of the option contract was $70. . On April 5, 2022, the price of XYZ stock was $135 per share. A market appraisal indicated that the time value of the option contract was $60. On this date, Mills settled the option contract. Required: 1. Indicate any amounts that Mills Corp. would have included in its March 2022 quarterly financial statements related to the option contract Complete this question by entering your answers in the tabs below. Req 1 Indicate…
Maynard Corporation buys 1,000 call options to buy 1,000 shares of Rossman, Inc., common stock on December 1, 20X1. At the time of the purchase, the option price is $5.00, the Rossman stock price is $30.00, and the exercise price is $32.00. On December 31, 20X1, the option price is $5.90 and the stock price is $36.00. Identify the derivative, the underlying, and the notional value. Assume that the derivative is accounted for as a stand-alone derivative. What journal entries would Maynard Corporation make during 20X1 to record the effects of the option purchase?
Today is October 31, 20XX. The shares of ARC Resources Ltd. are currently trading at $24.25 per share. One of the call options traded on ARC shares is 20XX November 25 with a bid price of $0.20 and an ask price of $0.25. What are the upper and lower bounds for this ARC call? Multiple Choice $24.25; -$0.75 $0.75; $0 $24.25; $0 $0, -$0.75 $24.25; $0.75

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS