European call option which expires today

Assignment Help Financial Management
Reference no: EM131331035

You are the writer (seller) of a European call option which expires today. The call premium is $0.75 and the exercise price is $13.50. The underlying stock price is 12.50. What is your profit or loss? (1)

Reference no: EM131331035

Questions Cloud

Using for your flagship product battlin bobby : You are considering adding a new software title to those published by your highly successful software company. If you add the new product, it will use capacity on your disk duplicating machines that you had planned on using for your flagship product,..
Evaluating different cookie-baking ovens : You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $59,000, has a 5-year life, and has an annual OCF (after tax) of –$10,400 per year. The Keebler CookieMunster costs $92,000, has a 7-year life, and has an annual OCF (after..
Two machines used in your manufacturing plant : You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $160 initially, and then $95 per year in maintenance costs. Either machine must be replaced at the end of its life with..
Calculate the percentage changes in roe when the economy : RAK, Inc., has no debt outstanding and a total market value of $200,000. Earnings before interest and taxes, EBIT, are projected to be $26,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 12 percen..
European call option which expires today : You are the writer (seller) of a European call option which expires today. The call premium is $0.75 and the exercise price is $13.50. The underlying stock price is 12.50. What is your profit or loss? (1)
Received from drug companies for his latest discovery : Dr. Harold Wolf of Medical Research Corporation (MRC) was thrilled with the response he had received from drug companies for his latest discovery, a unique electronic stimulator that reduces the pain from arthritis. Thirty percent of the buyer’s gros..
Compute before-tax yield to investors from the bonds-warrant : The current stock price of Mesa Industries, Inc. is $20 per share. The company wants to sell 20-year, annual coupon, $1000 par value bonds. Each bond will have attached 50 warrants; each warrant is exercisable into 1 share of stock at an exercise pri..
Calculate the promised yield on bond : You notice in the WSJ a bond that is currently selling in the market for $1,070 with a coupon of 11% and a 20-year maturity. Using annual compounding, calculate the promised yield on this bond.

Reviews

Write a Review

Financial Management Questions & Answers

  Rust bucket motor credit corporation

Rust Bucket Motor Credit Corporation (RBMCC), a subsidiary of Rust Bucket Motor, offered some securities for sale to the public on March 28, 2008. Under the terms of the deal, RBMCC promised to repay the owner of one of these securities $100,000 on M..

  What will determine whether this strategy is feasible

Covered Interest Arbitrage. Evansville, Inc., has $2 million in cash available for 90 days. It is considering the use of covered interest arbitrage, since the euro’s 90 day interest rate is higher than the U.S. interest rate. What will determine whet..

  Weighted average cost of capital for this firm

The current stock price for a company is $40 per share, and there are 3 million shares outstanding. The beta for this firms stock is 1.2, the risk-free rate is 4.7, and the expected market risk premium is 5.9%. what is the Weighted Average Cost of Ca..

  What rate of return would she have earned for the past year

Last year, Joan purchased a $1,000 face value corporate bond with an 8% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 10.9%. If Joan sold the bond today for $1,033.23, what rate of ret..

  What is the current cost of common equity for the firm

Underestimated Inc.’s common shares currently sell for $36 each. The firm’s management believes that its shares should really sell for $57 each. The firm just paid an annual dividend of $2 per share and management expects those dividends to increase ..

  Determine the equivalent uniform annual worth

A company plans to invest $20,000 dollars are new equipment to reduce operating costs. It is estimated that the savings will be $7,000 per year for the 6 year life of the equipment. Determine the equivalent uniform annual worth (EUAW) of the equipmen..

  Outstanding bond issue has coupon rate

General Matter’s outstanding bond issue has a coupon rate of 11.6%, and it sells at a yield to maturity of 9.25%. The firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer in order to sell at fac..

  Shares of stock outstanding-what is target stock price

Fly Away, Inc., has balance sheet equity of $6.6 million. At the same time, the income statement shows net income of $798,600. The company paid dividends of $403,293 and has 100,000 shares of stock outstanding. If the benchmark PE ratio is 30, what i..

  Backup equipment-will additional profit cover cost of lease

A video game company uses three pieces of machinery to produce games. The company operates 365 days per year and the games produced each day can be sold at a profit of $10,000. How much more profit will the company expect to earn if they have the bac..

  What was its basic earning power ratio

x-1 corp's total assets at the end of last year were $405,000 and its ebit was 52,500. what was its basic earning power (bep) ratio?

  Bond price calculated with the bonds yield to maturity

A 2-year corporate bond has a coupon rate of 4 percent. The one-year spot rate is 3 percent and the forward rate is 5 percent. The bond credit spread is 1 percent for both the one-year and the two-year maturities. What is the price of the bond expres..

  What is holding period return on the stocks

On January 1st, 2000, you purchased 20 shares of ABC stock at $15 per share. You received dividends of $0.75 at the end of 2000, $1.05 at the end of 2001; and $1.20 at the end of 2002. You sold all the ABC stocks at the end of 2002 for $18.5 per shar..

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