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 $130 per share, with an expiration date of May 31, 2022. The option contract premium (the amount paid to enter the contract at signing) was $40. On March 31, a market appraisal estimated the time value of the option to be $30. Hudson settled the option contract on May 10. Prices of ICA stock during the option period are provided below. Price of ICA stocks March 1 $130 March 31 $120 May 10 $125 At what amount would Hudson report as the value of the put option in its March 31, 2022 balance sheet? Put Option account balance as of March 31, 2022 $ 4,000

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 $130 per share, with an expiration date of May 31, 2022. The option contract premium (the amount paid to enter the contract at signing) was $40. On March 31, a market appraisal estimated the time value of the option to be $30. Hudson settled the option contract on May 10. Prices of ICA stock during the option period are provided below. Price of ICA stocks March 1 $130 March 31 $120 May 10 $125 At what amount would Hudson report as the value of the put option in its March 31, 2022 balance sheet? Put Option account balance as of March 31, 2022 $ 4,000

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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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
Under its executive stock option plan, Boston Corporation granted options on January 1, 2021, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures were anticipated; however, unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Ignoring taxes, what is the effect on earnings in 2022? Multiple Choice -$18.5 million. -$18 million. -$19 million. -$20 million.
On January 1, 2020, Prospero Games Inc. granted stock options to managers and key employees under which the managers and employees could purchase shares of the company for $35. Prospero set aside 40,000 shares for this purpose. The options are exercisable within a four-year period beginning January 1, 2022 by employees still with the company, and the options expire on December 31, 2025. The estimated value of the options on January 1, 2020 is $4.50 per share. On January 10, 2022, 16,000 of the options were exercised when the stock price was $44. On December 17, 2022, an additional 10,000 of the options were exercised when the stock price was $48. No further stock options were exercised. Required: Prepare all the journal entries required between January 1, 2020 and December 31, 2025.
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…
Under its executive stock option plan, N Corporation granted options on January 1, 2021, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options to buy each share, estimated by an appropriate option pricing model on the date of grant, is $4 per option. No forfeitures are anticipated. Ignoring taxes, what is the effect on reported earnings in the year after the options are granted to executives? O $0 O $20 million O $60 million O $90 million
Fortune Brands granted options on January 1, 2024, that allows the recipient to purchase 15.0 million of the company's $1 par common shares within the next eight years, but not before December 31, 2026 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives? Note: Round your answer to 1 decimal place. Multiple Choice O $60.0 million $90.0 million $0 $20.0 million
) Drie Company granted 126,000 stock options to employees on 12/31/2021 as compensation over the next 3 years. The options had a strike price of $41 per share and market prices of $49 on 12/31/2022 and $47 on 12/31/2023. If they originally estimated the original fair value to be $1,260,000, how much compensation expense should they recognize on 12/31/2023, assuming that the options can only be used to purchase stock? ( ¹) O $1,008,000 O $756,000 O $252,000 O $420,000
Under its executive stock option plan, National Corporation granted 15 million options on January 1, 2021, that permit executives to purchase 15 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose that unexpected turnover during 2022 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2022 and 2023

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