Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 3, Problem 13PS
Summary Introduction
Adequate information
The bid price of Marriott share is $67.95 and the ask price stands to be $68.05. The limit order for sale of Marriott share stands to be $68.
To determine:
What instruction investor has given to the broker .Whether the order will get executed.
Introduction:
Bid ask spread reflects the difference between the prices cited for immediate purchase and sale of currency pairs, options, future contracts or stocks.
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Students have asked these similar questions
Reference the options chain for Caterpillar, Inc. (ticker: CAT) shown below. You sold one contract
of the $115 strike call. What is your max profit? State your answer in total dollar terms (i.e., total
out-of-pocket cost not factoring transaction costs), not contract-level terms. Your answer should
be a dollar amount with two decimal places of accuracy.
(Note on viewing table below: You may have to use a horizontal scrollbar to see all of the columns
in the table below.)
CAT Option Chain
Month: Nov 2020
Calls
Last Change Bid Ask Volume
12.40
11.75
10.05 +0.74
14.80 15.45
12.05 12.65
9.75 10.10
Open
Int.
7.70 +1.70 7.70 8.10 2
Strike
Puts
Last Change Bid Ask Volume
32 100.00 10.70 -0.27 10.55 10.90 12
154 105.00 13.00 -0.65 12.85 13.25 28
10 211 110.00 15.54
622 115.00 18.64
15.50 15.95
18.40 18.95
Open
Int.
426
403
308
292
Suppose you have a product for which you
will only place a single order with your
supplier. If 5) that order is placed before you
know demand, your expected profit is
1)__---
order after you know demand, your expected
profit is 2)__--
A) 1) mean demand; 2) second order quantity
B) 1) newsvendor expected profit; 2)
maximum profit
C) 1) maximum profit; 2) newsvendor
expected profit
D) 1) total mismatch profit; 2) maximum profit
but if you place the
Using the guidance from ASC 606, calculate the variable price for each of the following contracts with customers. Also, identify the method used and the rationale.
Customer A:
Customer B:
Possibility
Probability (%)
Price (USD)
Possibility
Probability (%)
Price (USD)
A
50
26.50
A
55
26.50
B
20
24.00
B
45
24.00
C
20
25.25
D
10
28.00
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