You have $5,000 to invest. You are considering twoinvestment options. You can buy a stock that tradesfor $50 a share. You can buy call options on thatsame stock for $1.25 with a strike price of $55. Eitherway, you will invest all $5,000. Use the informationabove to answer the following questions:What is your dollar return if you invest $5,000 in thecall option and the stock price at expiration is $45?The answer should be formatted as a number with2 decimal places (e.g. 99.99)Please do it in an easy-to-follow formula. Note it'sfor a call option.

Rate of return is the amount of profit earned on an investment made as a percentage of the initial…

or $50 a share. You can buy call options on that ame stock for $1.25 with a strike price of $55. Either vay, you will invest all $5,000. Use the information bove to answer the following questions: What is your dollar return if you invest $5,000 in the all option and the stock price at expiration is $45? The answer should be formatted as a number with

or $50 a share. You can buy call options on that ame stock for $1.25 with a strike price of $55. Either vay, you will invest all $5,000. Use the information bove to answer the following questions: What is your dollar return if you invest $5,000 in the all option and the stock price at expiration is $45? The answer should be formatted as a number with

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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Suppose you write 32 put option contracts with a $60 strike. The premium is $2.40. Evaluate your potential gains and losses at option expiration for stock prices of $50, $60, and $70. Note: Input all amounts as positive values. At stock price of $50, the At stock price of $60, the At stock price of $70, the
Use the data in the figure 20.1 and calculate thepayoff and the profits for investments in each ofthe following January expiration options, assumingthat the stock price on the expiration date is $125.a. Call option, X=$120b. Put option, X=$120c. Call option, X=$125d. Put option, X=$125e. Call option, X=$130f. Put option, X=$130
Suppose that a trader buys two call options and one put option. A one-year call| option on a stock with a strike price of $36 costs $1.90. A one-year put option on the stock with a strike price of $36 costs $1.68. What is the breakeven stock price rounded to the nearest cents , below which the trader makes a profit? Round your final result to the nearest cents and input one number only, without units or percentage sign [%], using the dot [.] to separate decimals. Your Answer: Answer
show this on a diagram please. An investor makes the following three investments: (i) the purchase of a stock for £38(ii) the purchase of a put option for £0.50 with a strike price of £35 and (iii) the sale ofa call option (ie. writing a call option) for £0.50 with a strike price of £40 . What is the maximum profit and loss for this position?
If a particular stock does not pay dividends and is currently priced at $24 per share, what should be the price of a call option with a maturity of one year and a strike price of $24.5 if put options with the same features currently cost $2? Assume a risk free rate of 2%. (use 5 decimal places)
Please answer with explanation. I will really upvote
A stock with a current market price of $50 has an associated put option priced at $6.5. This put option has an exercise price of $48. The put option has an intrinsic value of ______ and a time value of ______. Select one: a. $0; $4.5 b. -$2; $8.5 c. $2; $4.5 d. $2; $6.5 e. $0; $6.5
In an efficient market, a one-year call option on stock S with K = $25 is traded at$7.06, the current stock price S0 = $28.5, the expected market return is 7.5% and the T-Bill yield is 4%. You are about to purchase a one-year put option on the same stock with K = $26, someone offered it to you at a price of $3.6. Should you buy it?
answer in text form please (without image)
Need asap... Suppose that you have a call option that is at 1.30. it has a Delta of .35 a Gamma of .06 a Theta of .02 assume Vega is constant. today the stock moves from $45 to $46. the next day (day 2) the stock moves another dollar to $47. What is the value of your call option at the end of day two? A. $2.02 B. $1.69 C. $1.73 D. $1.98
A call option is currently selling for $5.30. It has a strike price of $60 and six months to maturity. A put option with the same strike price sells for $7.80. The risk-free rate is 4.3 percent, and the stock will pay a dividend of $2.80 in three months. What is the current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) Current stock price $
Suppose you want to price an American style put option for a stock being traded on theDryfontein Stock Exchange having the following parameters: s = 18, t = 0.25, K = 20, σ =0.2 and r = 0.07. Using n = 5, calculate the value of V2(2). Provide all necessary details.

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