Kyle sold 2 one-year European $25 call and 3one-year European $22 put on Janssen stock. The call price per share is $0.70 and the put price per share is $1.80. What will be the net profit on these option positions if the stock price is $23 on the day the options expire? Ignore trading costs and taxes. A) -540 B) 680 C) 140 D) 540 E) 0

Kyle sold 2 one-year European $25 call and 3one-year European $22 put on Janssen stock. The call price per share is $0.70 and the put price per share is $1.80. What will be the net profit on these option positions if the stock price is $23 on the day the options expire? Ignore trading costs and taxes. A) -540 B) 680 C) 140 D) 540 E) 0

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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Google puts with 1 year to expiration and an exercise price of $680 trade for $27. Google calls with 1 year to expiration and an exercise price of $680 trade for $45. The interest rate over 1 year is 1%. Assume all options are European and Google pays no dividends. Using the put-parity condition, the stock price is equal to $691.27. a) In one month, the stock price remains the same as given above. Is the call option value lower, higher, or the same. Explain briefly.
A speculator can choose between (i) buying 108 shares of a stock for $50.58 per share, and (ii) buying 1080 European call options on that stock with a strike price of $42 for $3.99 per option. At maturity, what is the stock price that would make the two alternatives equally profitable? a. 1.58 O b. 42.81 O c. 47.57 d. 45.96 e. 14.18
14) Multiples-Multiples-Multiples (MMM), a private equity firm, has a stock price of $89. MMM pays no dividends. A put option on MMM stock with an exercise price of $100 and an expiration date 6 months from now is worth $12.6 today. The (continuously compounded) risk-free rate is 2.5%. Compute the value of a call option on MMM stock with an exercise price of $100 and an expiration date 6 months from now. E Fc MacBook Pro
$80. The call premium is $6 and the put premium is $8. To keep thìngs simple, you can assume each contract allows the holder to buy or sell 13) You buy one call contract and also buy one put contract, both with the strike price of one (rather than the typical 100) share of the underlying stock. a. Compute the payoff to your option position if the stock price is $92 when the options expire. b. Compute the profit you made if the stock price is $92 when the options еxpire. c. What would happen to the value of your position if the volatility of returns for the underlying stock increases a day after you bought the call and the put? Please explain your answer for full credit. E FC MacBook Pro I A !!!
Kk.192.
H2. The current price of a non-dividend paying stock is 172.5. The continuously compounded risk free rate is 0.03. A savvy investor notices a mispriced five-year forward contract to pay 196 in exchange for one share of the stock. In order to exploit this mispricing, the investor shorts a share of the stock now, invests the money gained in the account earning 0.03, and then plans to settle the forward contract in five years. What is the final net earned by the investor?
a) Tembo holds a one-year put option on Shoprite common stock. The put option canbe exercised at K50. Assume that the expiration date has arrived and the premium isK3. What is the value of the Shoprite put option on the expiration date if:Shoprite common stock is selling at K56 per share?
Ef 104.
1.) The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the money by _____ pesos. 3.) What is the Intrinsic Value
If you place a stop-loss order to sell 500 shares of Nedbank at R130 when the current price is R135, how much will you receive for each share if the price drops to R127? a. Close to R127 ○ b. Close to R130 ○ c. Close to R135 d. Won't sell because the price is too low
7. The cuurent market price of a share of BCE storck is $50 . If a call option on this stock has a strike price of $45 the call: a. is out of the money b. is in the money c. sells for a higher price than if the market price of BCE stock is $0 d. a and c. e. b and c
T-bills currently yield 3.6 percent. Stock in Deadwood Manufacturing is currently selling for $73 per share. There is no possibility that the stock will be worth less than $66 per share in one year. a-1. What is the value of a call option with a $50 exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-2. What is the intrinsic value? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b-1. What is the value of a call option with a $48 exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-2. What is the intrinsic value? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c-1. What is the value of a put option with a $50 exercise price? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c-2. What is the intrinsic value?…

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