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You are the writer of a put option on Apple Inc. common stock. The option has an exercise price of $122 and the stock is currently trading at $124.70. The option premium is $3.60 per contract.
a. What is your net profit/loss if Apple Inc. stock price increased to $126 and stays at that price until the option expires? (Show your calculations)
b. What is your net profit/loss on the option if Apple’s stock price decrease to $115 and the option holder exercises the option? (Show your calculations)
c. Below, graphically show your answers to parts (b) and (c) in the profit and loss diagram. In the graph be sure to add the exercise price (X), the payoff structure from the option, the profit/loss amount on the y-axis for parts (b) and (c).
Why did Microsoft decide in 2004 to double its cash dividend and buy back up to $30 billion of the company's stock over the next four years?
Which one of these would not be paid from free cash flow? What is the highest marginal rate at which corporate income is taxed? Who pays taxes on earnings distributed as dividends?
All interest rates are given as p.a. You must a just to the period. Take money and interest rates to four decimals before rounding. During 1995, the Mexican peso to Us dollar exchange rate changed from Mex$5.33/U.S.$ to Mex$7.46/U.S.$. At the same ti..
The discounted payback as compared to the payback method will
project required by thursday 4th december 2014..kindly quote
Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below: Cost per Unit Variable costs Direct material $940 Direct labor 600 Variable overhead 300 Fixed costs Depreciation..
What was the motivation for the creation of higher-level programming languages? How did the introduction of higher-level programming languages change computing?
First National Bank pays 6.8% interest compounded semiannually. Second National Bank pays 6% interest, compounded monthly. Calculate the future value for each dollar invested in First National (Assume you invest $1).
Assume you are a trader with Deutsche Bank. From the quote screen on your computer terminal, you notice that Dresdner Bank is quoting €0.7627/$1.00 and Credit Suisse is offering SF1.1806/$1.00. You learn that UBS is making a direct market between the..
Young Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The curre..
Six years ago the Singleton Company issued 28-year bonds with a 13% annual coupon rate at their $1,000 par value. The bonds had a 8% call premium, with 5 years of call protection. Today Singleton called the bonds. Compute the realized rate of return ..
Sunrise Industries wishes to accumulate funds to provide a retirement annuity for its vice president of research, Jill Moran. Ms. Moran, by contract, will retire at the end of exactly 12 years. How large a sum must Sunrise accumulate by the end of ye..
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