Call option on exxon at a premium

Assignment Help Financial Management
Reference no: EM13891879

On January 11, 2015, I purchased a call option on Exxon at a premium of $14.5, exercise price of $50 and March 15, 2007 maturity. On January 21,2015, I closed my position by buying a put option on Exxon at a premium of $8.5, exercise price of $50 and March 15,2015 maturity. Is my original position closed?

Comment critically

Show detailed work

Reference no: EM13891879

Questions Cloud

What is the cost of common equity : Summerdahl Resorts' common stock is currently trading at $30.00 per share. The stock is expected to pay a dividend of $1.75 a share at the end of the year (D1 = $1.75), and the dividend is expected to grow at a constant rate of 5% a year. What is the..
Is there an arbitrage profit opportunity here : Suppose that you noticed the following prices: P=$48; S=$4; X=$50, for a one year European put option. The simple risk-free interest rate is 10% per year. Is there an arbitrage profit opportunity here? Yes or no?
Calculate the after-tax cost of debt : Calculate the after-tax cost of debt under each of the following conditions: Interest rate of 13%; tax rate of 0%. Round your answer to two decimal places. Interest rate of 13%; tax rate of 15%. Round your answer to two decimal places.
Compensation by stock options : Explain why managers might want to hedge less if they are compensation by stock options (holding everything else the same).
Call option on exxon at a premium : On January 11, 2015, I purchased a call option on Exxon at a premium of $14.5, exercise price of $50 and March 15, 2007 maturity. On January 21,2015, I closed my position by buying a put option on Exxon at a premium of $8.5, exercise price of $50 and..
Find equations for weights of the portfolio : Write system of equations for the 2nd Markovitz problem: given n assets and correlations between them and given a sigma, find equations for weights of the portfolio which maximize the mean return with a given sigma. You need to use Lagrange multiplie..
Explain why those ETFs or REITs : Assume you believe in the EMH and assume you have $500,000 to invest for long term (20-25 years). Allocate your $500,000 to 5 to 7 ETFs or REITs. Explain why those 5-7 ETFs or REITs.
Shares of stock outstanding and debt outstanding : Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its material supply. The current cash flow from assets for Arras is $7.6 milli..
Market maker-bid price and ask price : As a Market Maker, you would ________ at the Bid Price and ________ at the Ask Price (a.k.a. the Offer Price). In addition, your client would ________ at the Bid Price and ________ at the Ask Price.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the marked-to-market gain and loss for the investor

An investor purchases one September T-bond futures contract at 115-110. The settlement price for the contract on next day is 117-225. What is the marked-to-market gain/loss for the investor? (Please provide explanation with answer)

  Book value of equity stayed the same

If net income, total assets, and book value of equity stayed the same, what would be the effect on the DuPont Identity of an increase in sales?

  Expected future dividend growth rate

Two investors are evaluating Apple's stock for possible purchase. They agree on the expected value of D1, and on the expected future dividend growth rate. Silverado Mining Company's ore reserves are being depleted, so its sales are falling. Also, bec..

  Strict liability is liability regardless of fault

Strict liability is liability regardless of fault

  The balance sheet contains the

The balance sheet contains the

  Proper governance structure

The importance of having a proper governance structure with more emphasis on policies and procedures that will maximise the shareholders wealth and reduce the agency isses

  What should the price per share be

Preferred stock has a dividend of $12 a year. The required return is 6%. what should the price per share be?

  Suppose the average return on an asset

Suppose the average return on an asset is 11.5 percent and the standard deviation is 21.1 percent. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to determine the probability that in any given year you w..

  Expected return and beta on the portfolio

Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 20...

  Which company is offering a better deal

Classic Autos is offering free credit on $55,000 car. You pay $10,000 down today and then balance at the end of five years. Premium Motors next door does not offer credit, but will give you $15,000 off the list price. Which company is offering a bett..

  The primary risk of mortgage-backed securities

Which of the following is true of the primary market? The primary risk of mortgage-backed securities is: The tax deductibility of various expenses such as general and administrative expenses:

  Calculate the allowable growth in the banks assets

Calculate the allowable growth in the bank's assets supported by these projections. What growth rate could be supported if the bank issued additional common stock equal to 1 percent of bank assets, with the same earnings projections?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd