The following table lists prices of Amazon options in January 2018 when Amazon stock was selling for $1,300.ExerciseExpiration DateApril 2018PriceCall Price$132.7073.2033.00$161.70Put Price$1,200$ 31.1070.10134.20$ 53.551,3001,400$1,2001,3001,400$1,2001,3001,400July 2018104.0096.0062.55156.05January 2019$210.00$ 88.05155.35133.25112.00190.00Suppose that by January 2019, the price of Amazon could either rise from its January 2018 level to $1,300 × 1.20 = $1,560.00 or fall to$1,300/1.20 = $1,083.33.a. What would be your percentage return on a January expiration call option with an exercise price of $1,300 if the stock pricerose? (Round your answer to 2 decimal places.)b. What would be your percentage return if the stock price fell? (Negative value should be indicated by a minus sign.)c. Which is riskier: the stock or the option?Percentage return%а.b.Percentage return%c.Which is riskier: the stock or the option?

Stock represents the ownership right in the company. Owners of the company can get dividend if…

The following table lists prices of Amazon options in January 2018 when Amazon stock was selling for $1,300. Exercise Expiration Date April 2018 Price Call Price $132.70 Put Price $ 31.10 $1,200 1,300 73.20 70.10 1,400 33.00 134.20 $ 53.55 $1,200 1,300 July 2018 $161.70 104.00 96.00 1,400 $1,200 1,300 62.55 $210.00 155.35 156.05 $ 88.05 133.25 January 2019 1,400 112.00 190.00 Suppose that by January 2019, the price of Amazon could either rise from its January 2018 level to $1,300 x 1.20 = $1,560.00 or fall to $1,300/1.20 = $1,083.33. a. What would be your percentage return on a January expiration call option with an exercise price of $1,300 if the stock price rose? (Round your answer to 2 decimal places.) b. What would be your percentage return if the stock price fell? (Negative value should be indicated by a minus sign.) c. Which is riskier: the stock or the option? Percentage return % a. b. Percentage return % с. Which is riskier: the stock or the option?

The following table lists prices of Amazon options in January 2018 when Amazon stock was selling for $1,300. Exercise Expiration Date April 2018 Price Call Price $132.70 Put Price $ 31.10 $1,200 1,300 73.20 70.10 1,400 33.00 134.20 $ 53.55 $1,200 1,300 July 2018 $161.70 104.00 96.00 1,400 $1,200 1,300 62.55 $210.00 155.35 156.05 $ 88.05 133.25 January 2019 1,400 112.00 190.00 Suppose that by January 2019, the price of Amazon could either rise from its January 2018 level to $1,300 x 1.20 = $1,560.00 or fall to $1,300/1.20 = $1,083.33. a. What would be your percentage return on a January expiration call option with an exercise price of $1,300 if the stock price rose? (Round your answer to 2 decimal places.) b. What would be your percentage return if the stock price fell? (Negative value should be indicated by a minus sign.) c. Which is riskier: the stock or the option? Percentage return % a. b. Percentage return % с. Which is riskier: the stock or the option?

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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help please answer in text form with proper working and explanation for each and every part and steps with concept and introduction no ai no copy paste remember answer must be in proper format with all working
Given the information in the table, if the stock has a required return of 12.6%, what is the value of the stock?
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You have the following information on six-month European options based on a common underlying stock: Call options: $70.00 strike options trade at $9.71. $72.50 strike options trade at $8.30. • $75.00 strike options trade at $6.98. ● Put options: • $75.00 strike options trade at $13.55. • $77.50 strike options trade at $15.58. • $80.00 strike options trade at $17.77. If the continuously compounded risk free rate is 5.30%, what does put call parity suggest is the current stock price? Report your answer without a dollar sign to four decimal places.
TDX stock is currently trading at $100. A 3-month call option in this stock has an exercise price of $105 and trading at $1 (the option premium). A put option with similar maturity period and strike price is trading at $0.5.i) Compute the theoretical value of call and put options if TDX stock price at the end of 3 months will be $95, or $100, or $105, or $110, or $115. ii) Draw diagrams showing TDX stock price and theoretical values of call and put. iii) If you purchase one stock and one put option today, what will be the total value of your portfolio at the end of 3 months? iv) Compute your return on investment or holding period return made in part (iii) above.
The following limit orders for the XYZ stock have been submitted to the opening auction at the LSE: XYZ Limit Order Book Price Buys 21 20.875 20.75 20.625 20.50 20.375 20.25 20.125 20 10 15 20 10 5 10 What is the market clearing price? O A. some other price OB. 20.50 OC. 20.25 OD. 20.375 OE. 20.125 Sells 20 5 5 5 10 20 30
You are given the daily closing prices of a stock from Jan 1, 2018 to Jan 5, 2018: Date Stock price Jan 1 Jan 2 Jan 3 Jan 4 Jan 5 A 5.00 B 5.50 C 6.00 At the end of Jan 1, 2018, Jie purchased the following options that expire on Jan 5, 2018: (a) Arithmetic average strike Asian call option. (b) Up-and-in call option with a barrier of 110 and strike of 105. For both options, the underlying asset is the stock and the payoff is determined using the last 4 daily closing prices. Determine Jie's total payoff on Jan 5, 2018. D Possible Answers E 105 6.50 109 7.00 112 110 111
Calculate the value of a call option for the following stock. Use the Black-Scholes formula. Time to expiration Standard deviation Exercise price Stock price Annual interest rate Dividend 6 months 50% per year $50 $50 3% 0 (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of a call option
Calculate the price weighted index value for 31 Dec 2020, prior to the splits. Shares W and X had 2 for 1 splits after the close on 31 Dec 2020. The pre-split divisor was 4. Share W X Y Z Select one: O A. 121.25 O B. 72.5 O C. 81.69 O D. 100.0 31-Dec-20 Closing Price $ 75.00 $ 150.00 $ 25.00 $ 40.00 31-Dec-20 Shares 10,000 5,000 20,000 25,000 31-Dec-21 Closing Price $50.00 $65.00 $35.00 $50.00 31-Dec-21 Shares 20,000 10,000 20,000 25,000
Basic Option Strategies Profit Computation Assume the below prices for calls and puts: Call Put Strike Jul Aug Oct Jul Aug Oct 165 2.7 5.25 8.1 2.4 4.75 6.75 170 0.8 3.25 6 5.75 7.5 1. Buy one August 170 call contract. Hold it until expiration. lIdentify the breakeven stock price at expiration. What is the profit/loss if ST=190? What is the maximum profit? 2. Buy one October 165 put contract. Hold it until the options expire. Identify the breakeven stock price at expiration. What is the Maximum possible loss from the transaction? What is the profit/loss if ST=185
Using the forward price approach to finish the following blanks. The expected closing basis was -$.15. And the actual closing basis was -$0.25. Date 1-Oct Cash Cash Price $6.30 Futures May Futures $6.75 Cost of holding from Oct 1 to May 1 (including interest) = $0.21 What is the forward price? What is the break-even price? What is the expected profit margin? = 1-Oct 1-May Sell Cash @ $6.40 Sell May Futures @ $6.75 Buy May Futures @ ? What is the futures price on May 1? What is the gain or loss on futures market result? = What is the gain or loss on cash market result? = What is the realized price (or net selling price)? = What is the overall profit? = What is the break-even price?

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