James is offered 1,000 options on Jan 1, 2020. The exercise price is $5. In 2022, he exercises all 1,000 options when the price was $8. In 2024, he sells all 1,000 when the price was $12. Assume the options are ISOs. What is the income reported in 2022?
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James is offered 1,000 options on Jan 1, 2020. The exercise price is $5. In 2022, he exercises all 1,000 options when the price was $8. In 2024, he sells all 1,000 when the price was $12. Assume the options are ISOs. What is the income reported in 2022?
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- Please provide solutions and answers for the three questions. 1. Keiko buys a T-bill with a face value of $25,000.00 on 2020-12-26 that matures on 2021-05-18. The annual simple interest rate is 3.375%, and the daycount convention is ACT/365. What price P does she pay? 2. Wing Sze buys a T-bill with a face value of $20,000.00 on 2021-06-02 that matures on 2021-10-19. The annual simple discount rate is 3.500%, and the daycount convention is ACT/360. What price P does she pay? 3. Given i(12) = 1.90000%, find the equivalent effective quarterly rate.Javier owns a $21,000.00 T - bill that matures on 2014-06-20. His target price is $20,789.22, the (annual) simple interest rate is 1.320% and the daycount convention is ACT / 360. What is the first date on which he can sell the T - bill for more than the target price? How much does he receive?Mete graduated from Çankaya University IE department in August 2020 and he was able to secure a Business Analyst position recently. He is making good money and he plans to enroll in a Personel Retirement Plan. He plans to invest i 10,307 each year beginning 1 year from now and hopes to retire in 27 years. Which one of the following is closest to the equivalent future worth of Mete's investment in year 27 if the retirement plan earns an interest of 12% per year? Select one: a. t 278,289 b. t 1,971,444 c. t 1,542,776 d. t 1,471,441 e. t 1,745,738
- Suppose that your friend has a farm in 2019 and wants to make an investment 150,000 in 2030 for all farm requirements. a) If you can earn 3.13% per year on your investments, how much does he need to invest today to achieve his goal? b) Between 2019 and 2025 how much would he have raised if the interest increased to 3.5%. c) From question A calculate the future value for year one and year two.Marco is plans to retire in 16 years. He wants you to assume he will be retired for 19 years before he dies. You calculated that Marco needs $1,758,809 as a lump sum at the beginning of retirement. Use an investment return of 7 percent and an inflation assumption of 1.2 percent. How much money will he need to save monthly to have this amount when he begins retirement? (Round the final answer to 2 decimal places)3. Sean purchased a non-interest-bearing note of $5,000 from John, which is due on Dec 1, 2025. As in great need of cash, Sean decided to put the note to market for sale.
- Jacob wishes to borrow $80,000 from his bank, J.P. Morgan, in order to expand his business. J. P. Morgan agrees to lend him the money over a 5-year term at an APR of 8% and will accept either annual, quarterly, or monthly payments with no change in the quoted APR. Calculate the periodic payment under each alternative and compare the total amount paid each year under each option. Which period should Jacob choose and why? Show your calculations using a formula.Marco is 45 years old and plans to retire at age 66. He wants you to assume he will be retired for 18 years before he dies. Assume Marco needs $50,504 at the beginning of the first year of retirement. Use an investment return of 7 percent and an inflation assumption of 3 percent. What amount of money will he need to have saved at the beginning of retirement? (Round any interest rate calculations to 4 decimal places e.g. .0125 for 1.25% and round the final answer to 2 decimal places)Explain this step by step: Gerald purchased 3 put option contracts at an option premium of $0.95 and a strike price of $40. At expiration, the stock price was $42.25 per share. What is his percentage return? What is the percentage return if the stock price at expiration is $39.05? What is the percentage return if the stock price at expiration is $36.18?
- ASSarah purchases a call of CBA with exercise price $55 and sells a call of CBA with exercise price $50, both call options have the same expiration date. a. Draw the payoff diagram for her strategy as a function of the stock price at expiration. b. Draw the profit/loss diagram for this strategy as a function of the stock price at expiration. (hint: which option has a higher premium?).Rachel is considering an investment in Yonan Communications, whose stockcurrently sells for $65. A put option on Yonan’s stock, with an exercise price of $60, has amarket value of $2.90. Meanwhile, a call option on the stock with the same exercise priceand time until expiration has a market value of $9.13. The market believes that at the expirationof the options, the stock price will be $55 or $75 with equal probability.a. What is the premium associated with the put option? The call option?b. If Yonan’s stock price increases to $75, what would be the return to an investor whobought a share of the stock? If the investor bought a call option on the stock? If theinvestor bought a put option on the stock?c. If Yonan’s stock price decreases to $55, what would be the return to an investor whobought a share of the stock? If the investor bought a call option on the stock? If theinvestor bought a put option on the stock?d. If Rachel buys 0.5 share of Yonan Communications and sells one call…