User Account

All Pages

What will carol’s profit be on the stock transaction

Assignment Help Finance Basics
Reference no: EM131132080

Carol Krebs is considering buying 100 shares of Sooner Products, Inc., at $62 per share. Because she has read that the firm will probably soon receive certain large orders from abroad, she expects the price of Sooner to increase to $70 per share. As an alternative, Carol is considering purchase of a call option for 100 shares of Sooner at a striking price of $60. The 90-day option will cost $600. Ignore any brokerage fees or dividends.
a. What will Carol’s profit be on the stock transaction if its price does rise to $70 and she sells?
b. How much will Carol earn on the option transaction if the underlying stock price rises to $70?
c. How high must the stock price rise for Carol to break even on the option transaction?
d. Compare, contrast, and discuss the relative profit and risk associated with the stock and the option transactions.

Reference no: EM131132080

Questions Cloud

Describe which trends most significantly impact organization : Briefly describe which trends would most significantly impact the organization that you chose for your Course Project. (My organization I chose is Caterpillar, Inc.)
Define dummy variable and give two examples : Define dummy variable and give two examples. Analyze the three different types of data (cross-sectional, time series, panel data)
Design a gui program to find weighted average of four test : Design a GUI program to find the weighted average of four test scores. The four test scores and their respective weights are given in the following format.
Describe the nondisclosure parameters of this agreement : Identify how these parameters could help safeguard your organization (Caterpillar, Inc.) from the intentional and/or unintentional dissemination of trade secrets by senior executives.
What will carol’s profit be on the stock transaction : What will Carol’s profit be on the stock transaction if its price does rise to $70 and she sells? How much will Carol earn on the option transaction if the underlying stock price rises to $70? How high must the stock price rise for Carol to break eve..
What are the two floating point types in cpp : What are the two floating point types in C++ and how do they differ? How can you use the setprecision() and setiosflags() manipulators to control the output of decimal numbers?
Determine the amount of profit or loss an investor : For each of the 100-share options shown in the following table, use the underlying stock price at expiration and other information to determine the amount of profit or loss an investor would have had, ignoring brokeragefees.
Which type of forecasting tool seemed more appropriate : Which type of forecasting tool seemed more appropriate for the organization you selected-a qualitative or quantitative tool? Why? What do you see as the advantages and disadvantages of each in this specific organizational setting?
Review the assignment reflective journal : Review the Assignment.- Assignment: Reflective Journal - and also check it for flow, citations and referencing?

Reviews

Write a Review

Finance Basics Questions & Answers

  College savings account to pay for college and automobile

Brock and Betsy's daughter Abby just turned 6 years old today and they decided to plan for her education and automobile costs. Abby is expected to start college 12 years from today on her 18th birthday. Brock and Betsy want to plan for 4 years ..

  How does accounting define an extraordinary item cite

how does accounting define an extraordinary item? cite three examples of such an item. what are the analysis

  What is the present value of her winnings

Carol Jenkins, a lottery winner, will receive the following payments over the next seven years. If she can invest her cash flows in a fund that will earn 10.3 percent annually, what is the present value of her winnings? (Round answer to 2 decimal ..

  Are realized by this change of pay period

When Tallman Haberdashery, Inc., merged with Meyers Men's Suits, Inc., Tallman's employees were switched from a weekly to a biweekly pay period. Tallman's weekly payroll amounted to $750,000. The cost of funds for the combined firms is 11%. What annu..

  Which of the following is not an item added back to income

which of the following is not an item added back to income in the operations section of the statement of cash flows

  Beta and required return the riskless return is currently 6

beta and required return the riskless return is currently 6 and chicago gear has estimated the contingent returns given

  Your firm has 450 million invested in accounts receivable

your firm has 45.0 million invested in accounts receivable which is 90 days of net revenues. if this value could be

  What are the bid and ask prices in american terms

What are the bid and ask prices in American terms? Which currency is Citigroup buying at these prices and which currency is Citigroup selling?

  Explain the logic behind the establishment of the gold

1. explain the logic behind the establishment of the gold standard. why did the gold standard finally come to an

  Finance problems involving the time value of money

You annually invest $1,500.00 in an IRA starting at age 20 and make the contributions for 10 years. your twin sister does the same starting at age 30 and makes contributions for 30 years.  Both of you earn 7 percent annually on your investment.  Wo h..

  What does the firm’s capital structure represent?

What does the firm’s capital structure represent?

  Given the following statement please indicate whether it is

given the following statement please indicate whether it is true or false and why in ratio analysis the financial

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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