A strategy consists of buying a market index product at $430 and taking a position in put option on the index with a strike of $460. If the put premium is $12 and a 6-months interest .rates are 1.86, what is the profit or loss at expiration (in 10 months) if the market index is $440 without using a hedging strategy A( 4.565) B(3.07) c(10.04)

A strategy consists of buying a market index product at $430 and taking a position in put option on the index with a strike of $460. If the put premium is $12 and a 6-months interest .rates are 1.86, what is the profit or loss at expiration (in 10 months) if the market index is $440 without using a hedging strategy A( 4.565) B(3.07) c(10.04)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

At age 30 you invest P5,500 into a mutual fund. If the fund averages an 7% annual return, your investment is worth how much at age 55?
Problem 2: Select one of the following two plans using the present worth method. Given i= 20% per year. 1st Cost ($) Life (years) Salvage value ($) Annual Cost ($) Plan 1 25,000 10 5,000 6,000 Plan 2 50,000 20 0 2,500
Transformers for underground works were planned to be provided. Type A has an initial cost of $70,000 and a life of 8 years. Type B has an initial cost of $95,000 and a life expectancy of 12 years. The annual operating cost for type A is expected to be $9000, while the AOC for type B is expected to be $7000. Salvage values are $5000 for type A, and $10,000 for type B. Using the incremental cash flow analysis, choose the better alternative. 73000 O 72000
If the interest rate is R = 0.10, (approximately) what is the Present Value of $79.20 to be received one year from today? Group of answer choices A) None of the other options. B) $71.28 C) $72 D) $72.90 E) $70.20
Expand and simplify (i) (2k – 3)(k – 2)
None
Example: A new process for a manufacturing process will have a first cost of $55,000 with annual costs of $38,000. Extra income associated with the new process is expected to be $62,000 per year. What is the payback period at i= 12% per year? a) 2.29 b) 3.00 c) 6.00 d) 2.14 CITI
What life insurance option has a lower premium, is only life insurance, and purchased for a specific period of time. (10, 15, 20 years)
what is the value of gradient factor
An investor with a MARR of 15% and at least $40k to invest is using rate of return analysis to determine which, if either, of two mutually exclusive investment alternatives (X and Y) should be selected. Perform the analysis and make a recommendation. Alternative Initial cost (Sk) ROR (%) Life (years) Assume that the ROR of the incremental NCF (X - Y) is 10%. X Y 40 30 22 26 8 Choose do-nothing Choose Y because the ROR of Y is greater than the ROR of X Choose Y because the incremental ROR 0
Army Research Laboratory scientists developed a diffusion-enhanced adhesion process which is expected to significantly improve the performance of multifunction hybrid composites. NASA engineers estimate that composites made using the new process will result in savings in space exploration projects. The cash flows for one project are estimated. Determine the rate of return per year. Year, t Cost ($1000) Savings ($1000) 0 −210 — 1 −150 — 2–5 — 100 + 60(t − 2)
25 50 0-1-2-3- μ 75 i = 10% 100 F 40 0- -1- i= 10% A 80 120 -2-3-4 A A A (c) (d) {Answers: C = €109.45;A = €115;F = €276.37; A = €60.78)