7. Ahmed is strategizing to add option investment for short term on ABC stock that is currently trading at $35, the strike price is $40. With the interest rate of 3 percent and call option price of $2.45, what should be the put option price using put-call parity formula. A) $6.28 B) $2.85 C) unlimited D) $16.45 E) $9.70

7. Ahmed is strategizing to add option investment for short term on ABC stock that is currently trading at $35, the strike price is $40. With the interest rate of 3 percent and call option price of $2.45, what should be the put option price using put-call parity formula. A) $6.28 B) $2.85 C) unlimited D) $16.45 E) $9.70

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

See similar textbooks

Similar questions

Required: Refer to Figure 15.1, which lists the prices of various Microsoft options. Use the data in the figure to calculate the payoff and the profit/loss for investments in each of the following December 2019 expiration options on a single share, assuming that the stock price on the expiration date is $137. (Loss amounts should be indicated by a minus sign. Round "Profit/Loss" to 2 decimal places.) a. Call option, X = 135 b. Put option, X = 135 es c. Call option, X = 145 d. Put option, X = 145 Payoff Profit/Loss
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration.1. Calculate the intrinsic value of the PUT option if the stock is currently selling for $75.a) $0b) $15c) -$15d) $57e) 63f) None of the above 2. Calculate the breakeven stock price for the PUT option if the premium is $3. What is the time value of the put?a) $63; $3b) $57; $3c) $55; $0d) $76; $0e) $55; $0f) None of the above 3. Suppose the stock price at expiration is $75. Put premium is $3. The PUT optionWRITER’S profit would be:a) -$3b) $3c) -$15d) $15e) None of the above
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration. 1. Calculate the intrinsic value of the CALL option if the stock is currently selling for$75a) $0b) $15c) -$15d) $57e) 63f) None of the above 2. Calculate the breakeven stock price for the CALL option if the premium is $16. What is the time value of the call?a) $63; $1b) $57; $0c) $76; $16d) $55; $3e) $76; $1f) None of the above 3. Suppose the stock price at expiration is $75. Call premium is $16. The CALL optionWRITER’S profit would be:a) -$3b) $3c) -$15d) $15e) None of the above
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration. Suppose the stock price at expiration is $75. Put premium is $3. The PUT option WRITER’S profit would be:a) -$3b) $3c) -$15d) $15e) None of the above
Q1. You have purchased a call option on Johnson & Johnson common stock. The option has an exercise price of $57.50 and J & J’s stock currently trades at $58.93. The option premium is $2.17 per contract. Calculate your net profit on the option if J & J’s stock price rises to $62.50 and your exercise the option. Calculate your net profit on the option if J & J’s stock price falls to $58.00 and your exercise the option. If J & J’s stock price falls to $58.00 show that it is more profitable to exercise than not exercise the option you have purchased.
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration. Suppose the stock price at expiration is $75. Call premium is $16 and Put premium is $3. The CALL option will ___ because the call is ___. But the PUT option will ___ because the put is ___, with a TIME VALUE of ___.a) Be exercised; in-the-money; not be exercised; out-of-the-money; zerob) not be exercised; out-of-the-money; be exercised; in-the-money; zeroc) Be exercised; in-the-money; not be exercised; out-of-the-money; 1d) Be exercised; in-the-money; be exercised; in-the-money; zeroe) None of the above is correct
A PUT and a CALL option are written on a stock with a strikeprice of $60. The options are held until expiration Suppose the stock price at expiration is $75. Call premium is $16. The CALL option WRITER’S profit would be:a) -$3b) $3c) -$15d) $15e) None of the above
Suppose you write 46 call option contracts with a $80 strike. The premium is $5.61. Evaluate your potential gains and losses at option expiration for stock prices of $70, $80, and $90. Note: Input all amounts as positive values. Do not round intermediate calculations. At stock price of $70, the At stock price of $80, the At stock price of $90, the is is
A put option with an exercise price of P90 was priced at P4. At expiration, the underlying stock is selling for P95.50. If you wrote this put for P4, your profit or loss at expiration would be at what amount? please need it asap uhu
Using the following information, calculate the overall payoff on the option given the stock price at maturity. Exercise price: 50.00 Premium: 7.00 Call / put: Call Long / short: Short Stock price at maturity 40.00 Select one: A) (7.00) B) 7.00 C) 3.00 D) (3.00)
Assume a stock with an option with the information as follows. • Stock purchased price was $113.• Call option on the stock was purchased at $4. • Call option has strike price at $115.• the stock price is $117on expiration date Please explain the Call Options Payoff Diagrams below, why it plot like this (please explain step by step) . Thank you for your answering
Q4 Using the Put-Call Parity relationship, find the value of a put option (same strike, expiration as the call option) using the following information: Current stock price 6% Call option strike price $6.56 Option time to maturity $33 $32 1 years risk-free rate Call option current value SHOW WORK HERE, HIGHLIGHT FINAL ANSWER IN YELLOW

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS