### How much is your options investment worth

Assignment Help Financial Management
##### Reference no: EM131524880

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for \$46.

Call put option expiration strike price volume Last Volume Last

Macrosoft Feb 47 104 2.13 59 3.13

Mar 47 80 2.37 41 3.54

May 47 41 2.65 30 3.96

Aug 47 22 2.86 22 4.00

a. Suppose you buy 29 contracts of the February 47 call option. How much will you pay, ignoring commissions?

Suppose you buy 29 contracts of the February 47 call option. Macrosoft stock is selling for \$49 per share on the expiration date.

b-1 How much is your options investment worth?      Payoff \$

b-2 What if the terminal stock price is \$48?      Payoff \$

Suppose you buy 29 contracts of the August 47 put option.

c-1 What is your maximum gain?      Maximum gain \$

c-2 On the expiration date, Macrosoft is selling for \$42 per share. How much is your options investment worth?      Position value \$

c-3 On the expiration date, Macrosoft is selling for \$42 per share. What is your net gain? Net gain \$

Suppose you sell 29 of the August 47 put contracts.

d-1 What is your net gain or loss if Macrosoft is selling for \$42 at expiration? (Enter your answer as a positive value.)       \$

d-2 What is your net gain or loss if Macrosoft is selling For \$50 at expiration? (Enter your answer as a positive value.)       \$

d-3 What is the break-even stock price? (Round your answer to 2 decimal places, (e.g., 32.16).)      Break-even \$

### Write a Review

#### Project is extension of the firm current operations

Panelli's is analyzing a project with an initial cost of \$110,000 and cash inflows of \$65,000 in year one and \$74,000 in year two. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. What is..

#### Purchased the stock without margin

In the previous problem, suppose you sell the stock at a price of \$62. What is your return? What would your return have been had you purchased the stock without margin? What if the stock price is \$46 when you sell the stock?

#### What was the rate of return on investment

Assume that in 2014, an 1876 \$20 double eagle sold for \$18,000. What was the rate of return on this investment?

#### Stocks remained unchanged and one stock increased

Assume that on a particular day, the DJIA opened at 11,739.19. The divisor at that time was .1325064234. Suppose on this day the prices for 29 of the stocks remained unchanged and one stock increased \$5.08. What would the DJIA level be at the end of ..

#### Value is based on underlying security or commodity

All of the following are ISO commercial crime coverage exclusions except. A financial instrument that's value is based on an underlying security or commodity is called a/an?

#### Nonconstant growth stock valuation

Assume that the average firm in your company's industry is expected to grow at a constant rate of 7% and that its dividend yield is 5%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&..

#### Put option with a strike price

Under what circumstances will the seller (or writer) of the option earn a positive or zero profit?

#### What is the current bond price

Sqeekers Co. issued a 15yrs bonds a year ago at a coupon rate of 4.1 percent. The bonds make semi annual payments and have a par value of \$1000. If the YTM on these bonds is 4.5 percent what is the current bond price?

#### What will be its dividend payout ratio

A Telecommunications has a target capital structure that consists of 60 percent debt and 40 percent equity. The company anticipates that its capital budget for the upcoming year will be \$4,000,000. If Axel reports net income of \$3,000,000 and it foll..

#### What was the increase in real purchasing power associated

The CFO of your firm has asked you for an approximate answer to this question: What was the increase in real purchasing power associated with both 3-month Treasury bills and 30-year Treasury bonds? Assume that the current 3-month Treasury bill rate i..

#### What is standard deviation of these returns

A stock had returns of 11 percent, -18 percent, -21 percent, 20 percent, and 34 percent over the past five years. What is the standard deviation of these returns?

#### What was amazon original business model

What was Amazon's original business model? How has Amazon changed this model? How sustainable is this updated model?