Suppose that an investor buys a 100-share put option for $150. It has an exercise price of $38 and the underlying price per share of the stock at expiration is $39. What is the investor's amount of profit or loss, ignoring brokerage fees
Suppose that an investor buys a 100-share put option for $150. It has an exercise price of $38 and the underlying price per share of the stock at expiration is $39. What is the investor's amount of profit or loss, ignoring brokerage fees?
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A firm is in need of $2 million in new long-term financing. The firm is trying to decide whether to sell common stock or a convertible bond. The market price of the common stock at present is $42 per share. In order to sell this new issue, the stock has to be underpriced by $2 and sold for $40 per share. Currently the firm has 300,000 shares of common stock outstanding. The firm could also issue 20-year, 10 percent, and $1,000 par-
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