ABC Corporation bought 5 short futures. The contract size is 10,000 shares of Mining Inc. The strike price is P87 per share. If the market price of a share is P91 per share on the agreed date, ABC would have a total gain/(loss) from these contracts amounting to

Q: Denali Inc. is acquiring Whitney Corp. at an exchange ratio of 2:1. After the deal is announced,…

A: Merger arbitrage refers to the opportunity of earning profits from the disparity of the stock prices…

Q: Suppose you short sell 1000 Intel shares at $20 per share and provide your broker with an initial…

A: The initial margin is the money that an investor must place in their accounts before the initiation…

Q: down 10 percent. Compute the fair market value of an American put option on Strategy Inc. stock with…

A: Put Option: A put option provides the buyer the right to exercise the option when the spot price of…

Q: Kyle sold 2 one-year European $25 call and 3one-year European $22 put on Janssen stock. The call…

A: Call option premium earned=  .70*100*2= 140Put option premium earned= 1.80*100*3= 540

Q: An underwriter agrees to purchase the shares directly from the issuing firm for $60 million. The…

A: Approach to solving the question:For better clarity of the solution, I have provided the calculation…

Q: 5. Shares in Rugby plc, a non-dividend-paying company, are trading at £7.50. A one-year call option…

A: The call and put option are derivative products that gives the opportunity of buying and selling the…

Q: Suppose you decided to enter into a futures contract involving a stock that sells for Php888.75 per…

A: Here, Stock Price per share is Php 888.75 Total no. of Shares is 1000 shares Initial Margin…

Q: Purple Corporation just purchased a call option for 10,000 Red Corp. ordinary shares at a strike…

A: Market value per share us P534 Volatility is 10% Risk free rate is 3% Strikr price is P489 Time…

Q: The company offered its investors option contracts to buy their shares at P72 with the current price…

A: The options refer to the derivative that provides the right, but not the obligation to the option…

Q: A trader shorts futures contract to sell 4,000 stocks for $4.50 per stock. The initial margin is…

A: When a future contract is bought or sold, a trader is asked to keep margin balance of the total…

Q: 1.) A put option for 1,000 XYZ Corporation shares has a total value of P12,250. Its extrinsic value…

A: The extrinsic value of the option is the measure of the volatility in the price of the option. It…

Q: 1.) The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out-…

A: Put option is the option which gives the right to its buyer to sell the underlying security at…

Q: The Sugarland Co. has just gone public. Under a firm commitment agreement, the company received…

A: Floatation costs: The cost incurred by the company when new stock is issued is known as floatation…

Q: A share of the the ADR of a British firm, XYZ, is currently priced at 35 pounds (GBP). The current…

A: Given Information: Share price is GBP 35 Spot rate is $1.5/GBP 1 ADR is convertible into 100 shares

Q: BCD Company offer its investors option contracts to buy their shares at a price of P50. Currently,…

A: A call option is the type of vanilla option that provides the right to buy the underlying assets,…

Q: in 2006, kdee co issued $10 million of $1000 par value, 10% semiannual convertible debentures that…

A: For any convertible security, the conversion ratio is the number of common shares received at the…

Q: Schwifty Enterprises has currently 20 million shares trading in financial markets at a price of £10…

A: Ex rights price per share = ((New shares * issue price) + (Old shares * market price))/ (New shares…

Q: ABC Corporation plans to purchase a call option for 1,000 Red Corp. ordinary shares at a strike…

A: Black Scholes Model is used to calculate the value of a call option and requires 5 variables to…

Q: Canadian Air would like to sell 3825899 shares of stock using Dutch auction underwriting. The bids…

A: Bidder A = 650,000 Shares at $31 (3,825,899 - 650,000) = 3,175,899 Shares remainingBidder B =…

Q: 1. If you bought a September '17 contract, one contract is for 5,000 bushels, and the price closes…

A: Hi, as per our policy we will answer the first question alone. Since there are multiple questions…

Q: Assumptions: (a) Mr. X has a limited cash balance of P1,000,000.00. (b) The buying price of the…

A: Mr. X should sell his shares to Mr. if his sale proceeds cover costs associated with the stock i.e…

Q: Assume the commission per trade is $20 plus $1.75 per contract. Stock Price (May 1) Price…

A: Number of contracts of a put option is $1000/100 = 10 contracts Commission per trade cost = $20 +…

Q: The current price of certain share on the market is 15,50EUR. We assume that this share is paying a…

A: To calculate the theoretical price of the 8-month future contract, we need to consider the following…

Q: JPS plc's current share price is £3.63. An investor is wondering whether to buy shares in JPS or…

A: A warrant on a stock gives the holder the right but not the obligation to buy and sell the…

Q: Theta Corporation will be purchasing 20 pieces of P10,000 - par value X Inc. preferences shares.…

A: Present value : The financial concept used to establish the current valuation of future cash flows…

Q: Assume that a financial institution (FI) has purchased 3,500 shares of AB and 7,500 shares of CD.…

A: STEP 1  Sellers are anxious to sell any shares they currently own, despite the fact that the offer…

Q: The company offered its investors option contracts to buy their shares at P72 with the current price…

A: Black-Scholes model: The Black Scholes model determines the price of call and put option with the…

Q: ares of TIC Ltd. are currently priced at $ 415 and call option exercisable in three months' time has…

A: The given problem relates to Black Scholes Model.

Q: ABC Corporation plans to purchase a call option for 1,000 Red Corp. ordinary shares at a strike…

A: Stock Price   P…

Q: shares of Globe Inc. Strike price is P300 per share. There is an initial margin of 50%. The…

A: Initial Margin The initial margin is a monetary deposit that is required when you open a new future…

Q: Boeing (BA) shares currently sell for $330/share. BA expects to pay a $6.85/share dividend in…

A: The lower bound on the price of the European put option on a divided paying stock has to be…

Q: A trader has established a short straddle on shares of ABC ltd at sh 5 each for a put option and a…

A: A short straddle is an options trading strategy where a trader simultaneously sells both a call…

Q: ABC Corporation will be purchasing 1,000 pieces of $10,000-par value EFG Inc. preferences shares.…

A: Par value (P) = $10000 Dividend (D) = 12% of 10000 = $1200 n = 10 years Maturity value (M) = $10200…

Q: d short 700 shares of XYZ Company at $43 per share. The initial margin requirement was 60%. (The…

A: Shares are bought and sold on the basis of some margin and some loan from broker and they are…

Q: BCD Company offer its investors option contracts to buy their shares at a price of P50. Currently,…

A: Given, The spot price is P60 Risk free rate is 8.25%

Q: 23) Dumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is…

A: a.Productive put strategy will be employed by the Dumo.As it is a strategy for the management of…

Q: A short strangle was initiated with a strike price for the call at $70 and the strike price of the…

A: short strangle has one short call  and one short put with different  strike price. given, strike…

Q: Dumo is a trader at ZNF Equity traders and has just identified a stock, UFSI Limited, which is…

A:

Q: Eagle Security Co. has just gone public. Under a firm commitment agreement, the firm received $36.50…

A: The amount which underwriters, such as financial institutions, spend an issuing firm for its…

Q: The company offered its investors option contracts to buy their shares at P72 with the current price…

A: Put options are the option contract between two parties where the buyer of the contract has given…