Expiration 27-September-2019 27-September-2019 27-September-2019 15-November-2019 15-November-2019 15-November-2019 Strike 130 135 140 130 135 140 Call 8.65 4.82 1.99 11.50 8.12 5.32 Put 1.03 2.17 4.35 3.55 5.15 7.40 Note: Microsoft stock price on this day was $137.49. Source: Compiled from data downloaded from Yahoo! Finance.
Expiration 27-September-2019 27-September-2019 27-September-2019 15-November-2019 15-November-2019 15-November-2019 Strike 130 135 140 130 135 140 Call 8.65 4.82 1.99 11.50 8.12 5.32 Put 1.03 2.17 4.35 3.55 5.15 7.40 Note: Microsoft stock price on this day was $137.49. Source: Compiled from data downloaded from Yahoo! Finance.
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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The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Required:
a-1. If the stock price at option expiration is $143, will you exercise your call?
-
Yes
-
No
a-2. What is the net
a-3. What is the
b-1. Would you exercise the call if you had bought the November call with the exercise price $130?
multiple choice 2
-
Yes
-
No
b-2. What is the net profit/loss on your position? (Input the amount as a positive value.)
b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)
c-1. What if you had bought the November put with exercise price $140 instead? Would you exercise the put at a stock price of $140?
multiple choice 3
-
Yes
-
No
c-2. What is the rate of return on your position? (Negative value should be indicated by a minus sign.)
Transcribed Image Text:M Question 9 - Ch. 2 Asset Clas ×
-0
ezt.prod.mheducation.com/M X B Consider the three stocks in t × G Look at the futures listings for X
ezt.prod.mheducation.com/Media/Connect_Production/bne/finance/Bodie_Essentials_of_investment_12e/figure_2_10.htm
FIGURE 2.10 Stock options on Microsoft, September 4, 2019
Expiration
27-September-2019
27-September-2019
Strike
130
135
27-September-2019
140
15-November-2019
130
15-November-2019
135
15-November-2019
140
Call
8.65
4.82
1.99
11.50
8.12
5.32
Put
1.03
2.17
4.35
3.55
5.15
7.40
+
Note: Microsoft stock price on this day was $137.49.
Source: Compiled from data downloaded from Yahoo! Finance.
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VIEWStep 2: a-1. If the stock price at option expiration is $143, will you exercise your call?
VIEWStep 3: a-2. What is the net profit/loss on your position?
VIEWStep 4: a-3. What is the rate of return on your position?
VIEWStep 5: b-1. Would you exercise the call if you had bought the November call with the exercise price $130?
VIEWStep 6: b-2. What is the net profit/loss on your position?
VIEWStep 7: b-3. What is the rate of return on your position?
VIEWStep 8: c-1. What if you had bought the November put with exercise price $140 instead?
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