Explain the number of shares necessary

Assignment Help Finance Basics
Reference no: EM131238260

The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $42 or fall to $37. An investor buys put options with a strike price of $41. Explain the number of shares necessary and the condition required to hedge the position?

Reference no: EM131238260

Questions Cloud

Develop a specific recommendation : Develop a specific recommendation, with supporting rationale, as to whether or not Sprint's recent trend in financial and stock performance is of sufficient financial strength to warrant into entering into a long-term commitment.
Write paper about its historic and current impact on economy : Select a technology that is of interest to you (for example, sewing machines, tanks, computers, TV, etc.); write a paper about its historic and current impact on the economy, the environment, relationships, education, and morals. Give examples to ..
Buying a call and selling : A calendar spread can be created by buying a call and selling a put when the strike prices are the same and the times to maturity are different
Nations are better off after trade and specialization : As a whole, nations are better off after trade and specialization because ________.
Explain the number of shares necessary : The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $42 or fall to $37. An investor buys put options with a strike price of $41. Explain the number of shares necessary and the condition required to..
Default free security with annual coupon payments : Consider a 4-year, default free security with annual coupon payments and a face value of $1,000 that is issued at par. What is the coupon rate of this bond?
How do you think your chosen metaphor affects the conflict : How do you think your chosen metaphor affects the conflict? Once you have completed your post, read two peer posts and respond by analyzing the metaphors they used. In your opinion how effective is the metaphor they present?
Identify and criticize one major event in the 20th century : Identify and criticize one major event in the 20th century and its impact on global health . - Compared and contrast its effects between the developed and the developing world (middle-income).
What is the future value of the first plan : What is the future value of the first plan at the end of 10 years? What is the future value of the second plan at the end of 10 years?

Reviews

Write a Review

Finance Basics Questions & Answers

  What are the standard deviations for a and b

If you equally invest your money in A and B to form a portfolio, what would be your portfolio's expected rate of return? What would be your portfolio's beta?

  Converting trial balances from foreign currencies

What are the two methods used to convert trial balances from foreign currencies into U.S. dollars? Describe the situations when you would use each metod.

  Green and red has a cost of equity of 11 and a pre-tax

green and red has a cost of equity of 11 and a pre-tax cost of debt of 8.5. the firms target weighted average cost of

  Determining cost of equity as well as weighted average cost

Determining cost of equity as well as weighted average cost of capital and What would be the impact on its feasible project set

  Cost of capital on business decisions

1. How does the cost of capital effect the business? 2. What are the effects of the cost of capital on business decisions?

  Suppose that you invest the 50000 winnings that you receive

for q1-q3 you may use tvm tables a financial calculator or excel to solve. be sure to show all the steps in your work

  Find project xs initial cash outlay

Incremental expenses of the system include two new operators with annual salaries of $40,000 each and operating expenses of $12,000 per year. The firms' tax rate is 34 percent.

  Gross domestic product

Gross Domestic Product

  Reaction to the terms capitalism and socialism

What is your emotional reaction to the terms capitalism and socialism? Explain why you feel the way you do.

  Could choice of banks be influenced by fact which you might

universal bank pays 7 percent interest compounded annually on time deposits. regional bank pays 6 percent interest

  What is th expected return of the portfolio

You are the investment manager you have three assests. Treasury Bills, Carclays corporate bond fund, and Large Capt Stock. Bond Fund: Expected return is 6% and standard deviation is 9%

  What is the required rate of return on alphas stock

The divident yield on Alpha's common stock is 4.8%. The company just paid a $2.10 dividend. The rumor is that the dividend will be $2.205 next year. The dividend growth rate is expected to remain constant at the current level. What is the required ra..

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