Appeared in a column in the wall street journal

Assignment Help Financial Management

Reference no: EM131323924

In late April 2010, Apple’s stock was selling for more than $260 per share. The following appeared in a column in the Wall Street Journal, listing potential problems facing Apple that might cause the price of the firm’s stock to decline: Some of these are issues that could erupt into problems quickly. Others, if they do emerge, would take more time. But if you’re a nervous Apple investor, what are your alternatives? Sure you could sell some stock and take your profits. But if you don’t want to get off this train quite yet here’s another idea: You could buy some insurance using “put” options. a. How does buying a put option provide insurance against a fall in the price of stock? b. Compare the pros and cons of buying a put option versus selling a stock if you are worried that the price of the stock might decline Source: Brett Arends, “seven Reasons Apple Share Holders Should Be Cautious,” Wall Street Journal, April 23, 2010.

Reference no: EM131323924

Questions Cloud

Half year straight line depreciation method : Consider a project that has 6 years of life time. This project requires investment of $1,000,000 at time zero for machinery and equipment to be depreciated over 5 year with half year straight line depreciation method (starting in year 1 to year 6). C..

About the risk of investing in badger championship : Assume Badger Championship, LLC has a CAPM beta of 0, the risk free rate is 1.0%, and the expected return on the market portfolio is 8.2%. You also know that Badger Championship, LLC has a standard deviation of 38.2%. Given its standard deviation and..

Employment contract with its newly hired : Holiday Tours (HT) has an employment contract with its newly hired CEO. The contract requires a lump sum payment of $23 million be paid to the CEO upon the successful completion of her first three years of service. HT wants to set aside an equal amou..

A foreign exchange rate : A foreign exchange rate is:

Appeared in a column in the wall street journal : In late April 2010, Apple’s stock was selling for more than $260 per share. The following appeared in a column in the Wall Street Journal, listing potential problems facing Apple that might cause the price of the firm’s stock to decline: Some of thes..

What is an option premium and option intrinsic value : What is an option premium? What is an option’s intrinsic value? What other factors, besides intrinsic value, can affect the size of an option premium?

Speculators earn a profit by absorbing risk : An opinion column in the Wall Street Journal observes: “Speculators earn a profit by absorbing risk that others don’t want. Without speculators, investors would find it difficult to quickly hedge or sell their positions.” In what sense do speculators..

What were total liabilities and total long-term debt : At year-end 2013, Wallace Landscaping’s total assets were $1.5 million and its accounts payable were $415,000. Sales, which in 2013 were $2.6 million, are expected to increase by 30% in 2014. What were Wallace's total liabilities in 2013? What was Wa..

True concerning total asset growth anomaly-asian options : Which one of the following statements is NOT true concerning the total asset growth anomaly? Which one of the following statements is NOT true concerning Asian options?

User Account

All Pages