On April 1, 2019, Wilson Corp. purchased a call option on shares of FVA stock. The contract was for 100 shares at a strike price of $140 per share, with an expiration date of June 30, 2019. The option contract premium was $30. Wilson settled the option on June 15, when a market appraisal estimated the time value of the option to be $10. Prices of FVA stock during the option period are provided below. Price of FVA stock: Gain or Loss on settlement?: Amount of Gain or (Loss): April 1 $140 Compute the gain or loss on settlement of the option contract. (Negative amounts should be indicated with a minus sign.) Show Transcribed Text Price of ICA stock: Show Transcribed Text June 15 $145 On March 1, 2019, Hudson Corp. purchased a put option on shares of ICA stock. The contract was for 100 shares at a strike price of $90 per share, with an expiration date of May 31, 2019. The option contract premium was $50. On March 31, a market appraisal estimated the time value of the option to be $40. Hudson settled the option contract on May 10. Prices of ICA stock during the option period are provided below. March 31 $80 May 10 $85 At what amount would Hudson report as the value of the put option in its March 31, 2019 balance sheet? March 1 $90 Put Option account balance as of March 31, 2019: Price of SST stock: Time value of option: June 30 $135 March 1 $110 $60 3 1. Cost of option: 2. Put Option account balance on settlement date: On March 1, 2019, Ferguson Corp. purchased a put option on shares of SST stock. The contract was for 100 shares at a strike price of $110 per share, with an expiration date of May 31, 2019. Ferguson settled the option on May 5. Additional information pertaining to the option is provided below. March 31 $100 $50 Ć 3 Ć May 5 $105 $40 Required: 1. Compute the cost of the option paid by Ferguson Corp. on March 1, 2019. 2. Compute the balance of the option account on date of settlement.
On April 1, 2019, Wilson Corp. purchased a call option on shares of FVA stock. The contract was for 100 shares at a strike price of $140 per share, with an expiration date of June 30, 2019. The option contract premium was $30. Wilson settled the option on June 15, when a market appraisal estimated the time value of the option to be $10. Prices of FVA stock during the option period are provided below. Price of FVA stock: Gain or Loss on settlement?: Amount of Gain or (Loss): April 1 $140 Compute the gain or loss on settlement of the option contract. (Negative amounts should be indicated with a minus sign.) Show Transcribed Text Price of ICA stock: Show Transcribed Text June 15 $145 On March 1, 2019, Hudson Corp. purchased a put option on shares of ICA stock. The contract was for 100 shares at a strike price of $90 per share, with an expiration date of May 31, 2019. The option contract premium was $50. On March 31, a market appraisal estimated the time value of the option to be $40. Hudson settled the option contract on May 10. Prices of ICA stock during the option period are provided below. March 31 $80 May 10 $85 At what amount would Hudson report as the value of the put option in its March 31, 2019 balance sheet? March 1 $90 Put Option account balance as of March 31, 2019: Price of SST stock: Time value of option: June 30 $135 March 1 $110 $60 3 1. Cost of option: 2. Put Option account balance on settlement date: On March 1, 2019, Ferguson Corp. purchased a put option on shares of SST stock. The contract was for 100 shares at a strike price of $110 per share, with an expiration date of May 31, 2019. Ferguson settled the option on May 5. Additional information pertaining to the option is provided below. March 31 $100 $50 Ć 3 Ć May 5 $105 $40 Required: 1. Compute the cost of the option paid by Ferguson Corp. on March 1, 2019. 2. Compute the balance of the option account on date of settlement.
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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Please do not give image format
Transcribed Image Text:On April 1, 2019, Wilson Corp. purchased a call option on shares of FVA stock. The contract was for 100 shares at a strike price of $140
per share, with an expiration date of June 30, 2019. The option contract premium was $30. Wilson settled the option on June 15,
when a market appraisal estimated the time value of the option to be $10. Prices of FVA stock during the option period are provided
below.
June 15
$145
Compute the gain or loss on settlement of the option contract. (Negative amounts should be indicated with a minus sign.)
Price of FVA stock:
Gain or Loss on settlement?:
Amount of Gain or (Loss):
April 1
$140
Show Transcribed Text
Price of ICA stock:
On March 1, 2019, Hudson Corp. purchased a put option on shares of ICA stock. The contract was for 100 shares at a strike price of
$90 per share, with an expiration date of May 31, 2019. The option contract premium was $50. On March 31, a market appraisal
estimated the time value of the option to be $40.
Hudson settled the option contract on May 10. Prices of ICA stock during the option period are provided below.
March 31
$80
May 10
$85
At what amount would Hudson report as the value of the put option in its March 31, 2019 balance sheet?
Put Option account balance as of March 31, 2019:
Show Transcribed Text
March 1
$90
Price of SST stock:
Time value of option:
June 30
$135
March 1
$110
$60
On March 1, 2019, Ferguson Corp. purchased a put option on shares of SST stock. The contract was for 100 shares at a strike price of
$110 per share, with an expiration date of May 31, 2019. Ferguson settled the option on May 5. Additional information pertaining to the
option is provided below.
3
1. Cost of option:
2. Put Option account balance on settlement date:
March 31
$100
$50
ÿ
May 5
$105
$40
Required:
1. Compute the cost of the option paid by Ferguson Corp. on March 1, 2019.
2. Compute the balance of the option account on date of settlement.
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