On April 1, 2023, Gamma Corp. purchases a call option for $500, which gives Gamma the right to buy 1,000shares of Delta Inc. for $30 each until December 1, 2023. Delta Inc. shares are currently trading for $30. AtJune 30, 2023, the options are trading at $4,800 and the shares at $32 each. At December 1, 2023, theoptions expire with no value.The time value of the option at April 1, 2023 is$0.$500.$4,800.$30,000.

Call option gives opportunity to buy stocks on maturity but there is no obligations to do that and…

Answered: On April 1, 2023, Gamma Corp. purchases…

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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Igloo Co. sells $397,000 of 12% bonds on June 1, 2020. THe bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2024. THe bonds yield 8%. On October 1, 2021 Igloo buys back $127,040 worth of bonds for $132,040 (includes accrued interest). Prepare the journal 1 entry for the buyback on Oct 1. I know the entry to record interest expense and premium amort for Oct 1 is Interest expense 3743 Premium on bond payable is 1339 Cash 5082 I do not know the entry on Oct 1 to record the buy back of bonds
A-11: Put option On March 1, 2022, Hudson Corp. purchased a put option on shares of ICA stock. The contract was for 100 shares at a strike price of $120 per share, with an expiration date of May 31, 2022. The option contract premium was $30. On March 31, a market appraisal estimated the time value of the option to be $20. Hudson settled the option contract on May 10. Prices of ICA stock during the option period are provided below. March 1 $120 March 31 $110 May 10 $115 At what amount would Hudson report as the value of the put option in its March 31, 2022 balance sheet? Price of ICA stock: Put Option account balance as of March 31, 2022: $ 6,000
On May 1, 2020, Sunco Limited purchased a call option from Moonco Corporation. The option gave Sunco the right to purchase shares in a third company, Galaxy Company. Sunco settled the options in cash on June 16, 2020. Following are additional details pertaining to the option: Number of shares that can be purchased with the call option 7,400 Call option exercise price per share $ 10.03 Market price per share of Galaxy Company on May 1, 2020 $ 10.03 Price paid by Sunco to purchase the option $ 1,800 Market price per share of Galaxy Company on May 31, 2020 $ 11.24 Fair value of call option on May 31, 2020 $ 9,200 Market price per share of Galaxy Company on June 16, 2020 $ 11.29 Fair value of call option on June 16, 2020 $ 8,800 Sunco has a year end of May 31. Required: Prepare the journal entries required on the books of Sunco Limited on each of the…
please give me answer with correct option
You purchased two contracts of "ABA December 11 2015 72.00 Put" at $4.20 per option and exercise it when the underlying stock price was $65.50. What is your profit and return on the investment, excluding the commissions?
Blossom Inc, purchases a call option contract on January 2, 2023, from Baird Investment Corp. The option gives Blossom the right to purchase 3,270 Laredo Corp. shares (the underlying) at $220 per share (the exercise/strike price), and it expires April 30, 2023. For the right to buy the shares at this fixed price, Blossom pays a premium of $880. This is a financial derivative because the underlying is anancial asset the Laredo shares.At the time of the transaction, Laredo shares are trading at $220. If the price of Laredo shares increases above $220, Blossom canexercise the option and purchase the shares for $220 per share. Alternatively. Blossom may sell the option to someone else.Prepare the related journal entry for Blossom at the acquisition date. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry. If no entry is required, select "No Entry"
Mf2. On January 1, 2022. Sarasota Company purchased 12% bonds having a maturity value of $430,000 for $462,600.36. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2022, and mature January 1, 2027, with interest receivable December 31 of each year. Sarasota elected the fair value option for this held-for-collection investment. Prepare any entry necessary at December 31, 2022, assuming the fair value of the bonds is $464,400. (Round answers to 2 decimal places, e.g. 5,275.25. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

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