The XYZ stock has a beta of 1.1 with respect to the SPY ETF.  You have invested $10,000 in XYZ but you are concerned about the possibility of the S&P500 index moving down, so you want to make your investment “market neutral”. Shares of SPY cost $50.  What action do you take? Short sell 220 shares of SPY Buy 200 shares of SPY Shor-sell 200 shares of SPY Buy put options on the SPY Sell Call options on the SPY

Q: You are long 1000 shares of XYZ stock. You want to stay in the position but are afraid of a move…

A: a. A covered call is a two-step technique in which calls are sold on a share-for-share basis while…

Q: Suppose you purchased 4,700 shares at the beginning of January (the beginning of Quarter 1) at the…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: You have determined the price of a common stock (Apple, Google, etc.) will increase substantially…

A: Answer

Q: You are bullish on Unum stock.  The current market price is $50 per share, and you have $4,000 of…

A: calculate gain and interest amount

Q: Suppose that JPMorgan Chase sells call options on $2.40 million worth of a stock portfolio with beta…

A: Let's examine the computations and justifications in greater detail:1. Determining the Market-Index…

Q: An investor has portfolio of shares consisting of P2,500 investment in each of twenty different…

A: Portfolio beta = 3.00 Beta of sold share = 3.00 Beta of bought share = 2.00 Share in the portfolio…

Q: Currently you own no stock or options.  Today's data for Green Corporation, where the call and put…

A: A put option would be exercised if the price of the stock at the time of expiration of the put…

Q: The current market price for common shares of Echo Company is $15. Put options on these shares…

A: Market Price of Common Shares = 15 Put Option Premium = 0.75 Strike Price = 10 Updated Market Price…

Q: You are bearish on Apple stock and decide to sell short 478 shares at the current market price of…

A: Total Transaction Value of short position  =  478 * $109.36…

Q: (C) each. You have $10.000 to invest. You invest all the $10,000 in call options on Alphabet Inc.…

A: Current Stock price of Alphabet Inc. = 1000Cal Option having Exercise [rce $1000 is selling for…

Q: You are a trader in IBM options for an investment bank. Your position is long 100 of the Jan 200…

A: Option Greeks are a set of risk measures that are used to quantify the sensitivity of an option's…

Q: You hold the positions in the table below. Price Shares Beta Advanced Micro Devices $ 8.00 303 4.92…

A: In the given case, we  have provided the price and shares for the investment made in different…

Q: I don't like my investments to go down too much. Using $50000 I can buy 200 shares of Tesla, at…

A: Call option refers to the derivative instrument which allows the investor to acquire the stock at a…

Q: You've been tracking your trading performance and wish to determine the expectancy from a trade you…

A: As per the given information: Amount - $300,000Risk on the trade - 0.50%Stop loss - 8%Trading price…

Q: Suppose that JPMorgan Chase sells call options on $1.10 million worth of a stock portfolio with beta…

A: Here,Worth of CallOptions is $1,100,000Beta is 1.45Option Delta is 0.52Current Worth of the Stock is…

Q: Please Give me the right answer and calculations The current stock price of Johnson and Johnson…

A: The Black-Scholes formula for a European put option is:P=Xe−rTN(−d2)−S0N(−d1)Where:S0​ is the…

Q: You are bullish on Telecom stock. The current market price is $100 per share. You borrow an…

A: The rate of return on an investment is the difference between the closing price and the opening…

Q: ou are bearish on Telecom and decide to sell short 210 shares at the current market price of $80 per…

A: Given:Number of shares short = 210Current market price= $80Initial margin requirement =…

Q: Suppose that JPMorgan Chase sells call options on $2.40 million worth of a stock portfolio with beta…

A: JPMorgan Chase intends to hedge its exposure from selling call options worth $2.40 million on a…

Q: You purchase on 50% margin, 150 shares of a stock with the following quotes: Bid Ask $24.00 $22 The…

A: The maintenance margin refers to the minimum amount of money that should be kept in the account as…

Q: You want to set up a covered call position on 1,000 shares of XYZ stock. Your goal is to collect the…

A: An option contract is an agreement that provides the buyer with the right to acquire or transfer a…

Q: A stock currently trades at $100. In one month its price will either be $125, $100, or $75. 1 sell…

A: The option is the financial derivative that provides the right to buy or sell the underlying asset…

Q: An investor is considering purchasing Apple’s stock for $150 per share. The investor is optimistic…

A: Strike price = $150 Option premium = $3.95 Breakeven value = ?   Breakeven value on the call option…

Q: You have $150,000 invested in three stocks as follows: Stock Investment Stock's Beta SYK $50,000 1.9…

A: Beta of portfolio is computed as follows:-Bp = (Ba*Wa)+(Bb*Wb)+(Bc*Wc)whereBp =Beta of portfolioBa =…

Q: Suppose you have purchased a Costco stock, which type of option should be chosen for hedging? Based…

A: Information provided: Risk free rate = 3% Volatility = 30% Time to maturity = 4 months Stock price =…

Q: You are holding call options on a stock. The stock’s beta is 0.65, and you are concerned that the…

A: To hedge your market exposure given the current situation, you can use the concept of beta hedging.…

Q: You hold the positions in the table below. Portfolio Beta Required return Price $48.00 29.00 76.00…

A: Market Return = rm = 14.60%Risk Free Rate = rf = 4.20%

Q: Suppose that a hedge fund enters a market order to immediately sell 1600 shares. Compute the…

A: Bid price is the price which the buyer is illing to pay for shares/asset. Ask price is the price…

Q: You have $37,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of…

A: Expected return of a portfolio = (Expected return from stock X *weight of stock X in portfolio) +…

Q: A stock's current price is $20 and a 3-month call with a strike price of $22 sells for $2. You have…

A: Call option-This is a form of a derivative contract.  Under this contract, the call option buyer has…

Q: The current stock price of Alcoco is $45, and the stock does not pay dividends. The instantaneous…

A: Stock value (St) = $45 Exercise price (K) = $50 Period (t) = 30 Days Risk-free rate (r) = 3%  SD of…

Q: You have a bullish view on the US stock market for the three days. You have $500 to invest. You…

A: The value that is added to the investor on account of indulging in investment activity is known as…

Q: You are considering investing in a technology stock but are concerned that the required return may…

A: according to CAPM model: stock return =rf+beta×rm-rfwhere,rf= risk free raterm= market return

Q: Stock R has a beta of 1.3, Stock S has a beta of 0.35, the expected rate of return on an average…

A: Beta of a stock is the degree of variation of the stock returns against the market returns. Cost of…

Q: An investor is considering investing in the following two shares: Beta Fortress plc. 1.4 Castle plc…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…