Corporate Finance: The Core (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134202648
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 20, Problem 3P
Below is an option quote on IBM from the CBOE Web site showing options expiring in October and November 2015.
- a. Which option contract had the most trades on that day?
- b. Which option contract is being held the most overall?
- c. Suppose you purchase one option with symbol IBM 1516J150. How much will you need to pay your broker for the option (ignoring commissions)?
- d. Explain why the last sale price is not always between the bid and ask prices.
- e. Suppose you sell one option with symbol IBM1516V 150. How much will you receive for the option (ignoring commissions)?
- f. The calls with which strike prices are currently in-the-money? Which puts are in-the money?
- g. What is the difference between the option with symboiiBM1 516J140 and the option with symbol IBM1506K140?
- h. On what date does the option with symbol IBM1516V140 expire? In what range must IBM’s stock price be at expiration for this option to be valuable?
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Problem 2-21 Financial Statements
Use the following information for Ingersoll, Incorporated. Assume the tax rate is 23
percent.
2020
2021
Sales
Depreciation
$ 19,073
$17,436
1,811
1,886
Cost of goods sold
4,729
4,857
Other expenses
1,021
899
Interest
870
1,001
Cash
6,292
6,916
Accounts receivable
8,190 9,877
Short-term notes payable
1,320 1,297
Long-term debt
20,770 25,011
Net fixed assets
51,218 54,723
Accounts payable
4,624 5,094
Inventory
14,538
15,438
1,700 1,768
Dividends
Prepare a balance sheet for this company for 2020 and 2021. (Do not round
intermediate calculations.)
Cash
Assets
Accounts receivable
Inventory
INGERSOLL, INCORPORATED
Balance Sheet as of December 31
2020
2021
$
6,292 $
6,916
8,190
9,877
14,538
15,438
Drov
14 of 20
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Chapter 20 Solutions
Corporate Finance: The Core (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 20.1 - What is the difference between an American option...Ch. 20.1 - Does the holder of an option have to exercise it?Ch. 20.1 - Prob. 3CCCh. 20.2 - What is a straddle?Ch. 20.2 - Explain how you can use put options to create...Ch. 20.3 - Explain put-call parity.Ch. 20.3 - If a put option trades at a higher price from the...Ch. 20.4 - What is the intrinsic value of an option?Ch. 20.4 - Can a European option with a later exercise date...Ch. 20.4 - How does the volatility of a stock affect the...
Ch. 20.5 - Is it ever optimal to exercise an American call on...Ch. 20.5 - When might it be optimal to exercise an American...Ch. 20.5 - Prob. 3CCCh. 20.6 - Explain how equity can be viewed as a call option...Ch. 20.6 - Explain how debt can be viewed as an option...Ch. 20 - Explain the meanings of the following financial...Ch. 20 - What is the difference between a European option...Ch. 20 - Below is an option quote on IBM from the CBOE Web...Ch. 20 - Prob. 4PCh. 20 - Prob. 5PCh. 20 - You own a call option on Intuit stock with a...Ch. 20 - Assume that you have shorted the call option in...Ch. 20 - You own a put option on Ford stock with a strike...Ch. 20 - Assume that you have shorted the put option in...Ch. 20 - What position has more downside exposure: a short...Ch. 20 - Consider the October 2015 IBM call and put options...Ch. 20 - You are long both a call and a put on the same...Ch. 20 - You are long two calls on the same share of stock...Ch. 20 - A forward contract is a contract to purchase an...Ch. 20 - You own a share of Costco stock. You are worried...Ch. 20 - Dynamic Energy Systems stock is currently trading...Ch. 20 - You happen to be checking the newspaper and notice...Ch. 20 - In mid-February 2016, European-style options on...Ch. 20 - Suppose Amazon stock is trading for 500 per share,...Ch. 20 - Consider the data for IBM options in Problem 3....Ch. 20 - You are watching the option quotes for your...Ch. 20 - Explain why an American call option on a...Ch. 20 - Consider an American put option on XAL stock with...Ch. 20 - The stock of Harford Inc. is about to pay a 0.30...Ch. 20 - Suppose the SP 500 is at 900, and a one-year...Ch. 20 - Suppose the SP 500 is at 900, and it will pay a...Ch. 20 - Prob. 29PCh. 20 - Suppose that in July 2009, Google were to issue 96...
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