On March 1, 2025, Ferguson Corp. purchased a put option on shares of SST stock. The contract was for 100 shares at astrike price of $120 per share, with an expiration date of May 31, 2025. Ferguson settled the option on May 5 (assume cashsettlement). Additional information pertaining to the option is provided below.March 1March 31May 5Price of SST stock:$120$110$115Time value of option:$30$20$10Required:1. Compute the cost of the option paid by Ferguson Corp. on March 1, 2025.2. Compute the balance of the option account on date of settlement.

An option gives the option-holder a right to exercise the option and buy/sell the underlying asset.…

Answered: On March 1, 2025, Ferguson Corp.…

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

See similar textbooks

Similar questions

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 December 1, 2021, the general ledger balance of Dolphin Inc.'s stock investment portfolio, which is classified as fair value through net income (FV-NI) is $284,900. On December 31, the controller determines that the fair value of this portfolio should be $312,600. The adjusting entry for the portfolio will include: Question 10 options: DR FV-NI investments $27,700 CR Cash FV-NI investments $27,700 CR FV-NI investments $27,700 DR Gain on investments $27,700
Suncor Energy Inc. (SU) shares are listed on the New York Stock Exchange. At 9:30 a.m. on January 14, 2016, these shares sold for $21.85 per share. The volatility on the returns of Suncor shares is approximately 24%. The following call and put option contracts were available for the months of January, February, and March: CALLS Strike/Expiry January 22, 2016 February 19, 2016 March 18, 2016 23 0.34 0.72 0.96 24 0.13 0.41 0.69 25 0.25 0.26 0.40 PUTS Strike/Expiry January 22, 2016 February 19, 2016 March 18, 2016 23 1.28 2.01 2.14 24 2.63 2.80 2.92 25 3.60 3.70 3.95 Each option contract involves 100 shares. The risk-free rates for these three expiration dates are 0.6%, 1%, and 1.2%. All three rates are continuously compounded. Given the information on Suncor shares and options above, construct a protective put using the 23-put with February expiration. Hold the protective put…
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…
At January 1, 2021, the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting). The fair value of the options is estimated as follows: Vesting Date Amount Vesting Fair Value per Option Dec. 31, 2021 20 % 2$ Dec. 31, 2022 30 % 2$ 8 Dec. 31, 2023 50 % $ 12 What is the compensation expense related to the options to be recorded in 2021? O $48,000. $96,000. O $128,000. O $184,000.
P16.3 Brondon Corp. purchased a put option on Mykia common shares on July 7, 2023, for $480. The put option is for 350 shares, and the strike price is $50. The option expires on January 31, 2024. The following data are available with respect to the put option: Date Sept. 30, 2023 Dec. 31, 2023 Jan. 31, 2024 Instructions Prepare the journal entries for Brondon for the following dates: July 7, 2023: Invests in put option on Mykia shares. 1 September 30, 2023: Brondon prepares financial statements. 1. December 31, 2023: Brondon prepares financial statements. January 31, 2024: Put option expires. Fair Value of Option $250 100 O Market Price of Mykia Shares $56 per share $58 per share $62 per share
please give me answer with correct option

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS