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

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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
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
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Q.
4. On April 1, 2021, Bleta Corp purchases a call option for $500, which gives Beta the right to buy 1,000 shares of ABC Inc. for $30 each until December 1, 2021. ABC Inc. shares are currently trading for $30 On June 30, 2021, the options are trading at $4,800 and the shares at $32 each. On December 1, 2021, the options expire with no value. On December 1, 2021. Beta's entry would be a. No entry required b. Loss 2,000 Derivatives-Financial Assets c. Loss 2,000 4,300 Derivatives-Financial Assets d.Loss 4,300 4,800 Derivatives-Financial Assets 4,800
please give me answer with correct option
You purchase one Virgin Galactic March 120 put contract (equalling 1000 shares) for a put premium of $10. You hold the option until the expiration date, when Virgin Galactic stock sells for $123 per share. a) How much is the realized profit/loss on the transaction? b) What is the maximum profit that you can realize on this position? c) What is biggest loss that you can suffer on this position? d) What is the realized profit/loss of your counterparty (the buyer of this call option)? Please briefly explain the calculations as well, thanks!
Yates Co. Purchased a put option on Dixon common shares on January 7, 2014, for $270. The put option is for 300 shares, and the strike price is $64. The option expires on July 31, 2014. The following data are available with respect to the put option: Date Market Price of Dixon shares Time Value of Put Option March 31, 2014 $60 per share $150 June 30, 2014 $62 per share 68 July 6, 2014 $58 per share 20 Reguired: Prepare the journal entries for Yates Co. for the following dates: a. January 7, 2014-Investment in put option on Dixon shares. b. March 31, 2014-Yates prepares financial statements. June 30, 2014-Yates prepares financial statements. с. d. July 6, 2014- Yates settles the put option on the Dixon shares.

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