1. If you had bought the January put with exercise price $105, will you exercise your put?2. What is the profit (loss) on your position? Expiration18-Jan-201918-Jan-201918-Jan-20198-Feb-20198-Feb-20198-Feb-2019Strike9510010595100105Call7.653.811.459.505.603.08Note: Microsoft stock on this day was $101.51.Source: Compiled from data downloaded from Yahoo! Finance.Put0.982.204.792.863.926.35Table 2.6Prices of stockoptions on Microsoft,January 2, 2019

Put option When you purchase a put option, you are given the choice—but not the obligation—to sell a…

Strike 95 100 105 95 100 105 Expiration 18-Jan-2019 18-Jan-2019 18-Jan-2019 8-Feb-2019 8-Feb-2019 8-Feb-2019 Note: Microsoft stock on this day was $101.51. Call 7.65 3.81 1.45 9.50 5.60 3.08 Put 0.98 2.20 4.79 2.86 3.92 6.35 Table 2.6 Prices of stock options on Microsoft, January 2, 2019

Strike 95 100 105 95 100 105 Expiration 18-Jan-2019 18-Jan-2019 18-Jan-2019 8-Feb-2019 8-Feb-2019 8-Feb-2019 Note: Microsoft stock on this day was $101.51. Call 7.65 3.81 1.45 9.50 5.60 3.08 Put 0.98 2.20 4.79 2.86 3.92 6.35 Table 2.6 Prices of stock options on Microsoft, January 2, 2019

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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Your answer is incorrect. Divide the estimated average annual income by the average investment. Investment cost plus residual value, divided by two, equals average investment. Can you please redo it? Thanks
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1. Consider a pure exchange economy with two goods and two consumers. Let F denote food and C denote clothing. Lacy has the utility function U(F, C) = F 1/3 C 2/3 . Roy has the utility function V (F, C) = F 2/3 C 1/3 . Each consumer has an initial endowment consisting of 9 units of F and 9 units of C. Normalize the price of F to one. Let P denote the price of C. (a) Is the initial endowment a Pareto efcient allocation of F and C between the two con sumers? Explain briefy. (b) What is each consumer’s demand for F and C as a function of P? [Hint: the wealth of each consumer is 9 + 9P.] (c) What is the price of C in a competitive equilibrium? (d) What is the allocation of F and C between the two consumers in a competitive equilibrium?
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