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1. Ms. Smith longs 1 XYZ Feb. 40 Call @ 3 and hold it it to expiration. Suppose no transaction costs, Examine this investment in terms of possible profit or loss. Make a payoff diagram.
2. Ms. Smith writes 10 BETA Jan. 40 put @ 4. The put is exercised when the stock is trading at 38. Ms. Smith immediately sells the stocks in the market. What is Ms. Smiths profit or loss?
3.Ms. Smith writes 10 KLP Dec. 55 call @ 5, uncovered. The call is excersized when the stock is trading at $58. What is Ms. Smiths profit or loss?
4. In Dec. 16 an investor buys 1 ALFA Feb 60 call @ 3 1/2. In January 10th ALFA share closes at $63. What is the intrinsic value of the call? What is its time value?
5. Ms. Smith shorts 1 XYZ Feb. 40 Call @ 3 covered. She purchases XYZ for $30 a share. Assuming no transaction costs, analyze this investment in terms of possible profit or loss. Draw a payoff diagram.
6. Suppose you have the following positionsLong 10 CDE Jan. 50 call @ 3Long 10 CDE Jan. 50 put @ 4
Analyze this investment in terms of possible profit or loss. Draw a payoff diagram.
Assume the dollar-pound rate equals $.5 per pound. According to purchasing power parity theory, determine the dollar's exchange rate under each of the following scenarios?
If the European euro were to depreciate relative to the United State dollar in the foreign exchange market, would it be easier of harder for the French to sell their wine in the U.S.?
In 1996, Kodak paid a cash dividend of $1.60 a share. At year-end 1996, Kodak shares were trading at about $80 each share. In 1997 and 2001, Kodak paid $1.76, & in 2002 increased its dividend to $1.80.
Which political system describes best the governance system of the EU? Is the governance system of the EU democratic? Why ‘yes', or why ‘not'?
Explain why would we expect the difference in the one year interest rate on the dollar vs one year interest rate on, the Euro or any other freely convertible currency,
Smith identify that if the forward rate is lower than what interest rate parity indicates, the appropriate strategy would be to lend:
Calculate the forward discount or Premium for the Mexican peso whose 90-day forward rate is $.102 and spot rate is $.10. State whether your answer is a discount or premium.
A Company is offered trade credit terms of 2/8, net 45. The company does not take the discount, and it pays after 58 days. Determine the effective annual cost of not taking this discount?
As the United State dollar appreciates in value relative to the Japanese Yen, what happens to the price of United State goods in Japan? What happens to the price of Japanese goods in United State?
Describe how the conditions of covered interest parity and uncovered interest parity are reached, and indicate the implications of the analysis for the prediction of the future spot rate.
A Corporation stock is trading at $120 per share. The firm plans to declare a 3 for 2 stock split. The stock split is expected to raise the companys market capitalization by 5%.
The firm produces a global positioning system that sells for $1,000 with costs of goods sold of 48 percent of sales. Compared to the US, China offers a 6 percent cost reduction
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