Maximum profit that can be made on a written put

Assignment Help Financial Management
Reference no: EM13941956

A 6-month European put option with a strike price of $120 is selling for $10. The continuous compounded risk free rate of interest is 12% per annum. What is the maximum profit that can be made on a written put?

Reference no: EM13941956

Questions Cloud

Select an issue on problem confronting managers : Part 1: Why it is important for leader to generate number of ideas to resolve problems? Part 2: Select an issue on problem confronting managers. As leader how would you resolve this?
Provide a brief introduction to the organisation : Provide a brief introduction to the organisation (it is acceptable to withhold the name of the organisation). Describe the problem, as much as possible in terms of the observable or measurable symptoms it manifests, for example: High percentage of fa..
What are some of the differences in the sql : What are some of the differences in the SQL supported by RDBMS vendors?
Cultural competence and organizational challenges : Changing demographics and health disparities challenge our health care leaders, managers, and practitioners. Patti Rose, author of Cultural Competency: For Health Administration and Public Health, provides one explanation for disparities based on th..
Maximum profit that can be made on a written put : A 6-month European put option with a strike price of $120 is selling for $10. The continuous compounded risk free rate of interest is 12% per annum. What is the maximum profit that can be made on a written put?
Paid semiannual interest on pitts company bonds : December 1: Paid semiannual interest on Pitts Co. bonds and purchased $1,000,000 face value bonds at the call price in accordance with the provisions of the bond indenture.
What is the price of the stock in three months : A stock currently has a price of 1300. The price of a three month 1320-strike put is 81.41. The annual interest rate is 4% compounded continuously. Bob buys this put, and Rick enters into a long forward contract. In three months, Bob and Rick have th..
Bond makes annual coupon payments : Company just issued a 10 year 7% coupon bond. The face value of the bond is $1,000 and the bond makes annual coupon payments. If the required return on the bond is 10%, what is the bond’s price?
Effective interest rate of loan and the stated interest rate : Explain the difference, if any, between the effective interest rate of a loan and the stated interest rate. How do lenders safeguard against loans secured by accounts receivable? What are some of the common methods for banks to increase their return ..

Reviews

Write a Review

Financial Management Questions & Answers

  Infinite time horizon-the value of stock can be described

Given the infinite time horizon, the value of stock can be described as _____________________________

  What is the present value of the bond show your work

You buy a government bond that pays interset twice a year. The interset payment is $300 each six months. The bond matures in six years. The face value of the bond is $10,000. The annual market interset rate is 6 percent.

  What is the break even interest rate

A firm will sell an asset for $75,000 in three years and the cost of producing the asset today is $36,000. If the interest rate is 12 % per year, will the firm make a profit? What is the breakeven interest rate?

  Interest is credited at an annual effective rate

The proceeds of a 10,000 death benefit are left on deposit with an insurance company for seven years at an effective annual interest rate of 5%. The balance at the end of seven years is paid to the beneficiary in 120 equal monthly payments of X, with..

  What is the maximum loss on your position

You bought 100 Google Shares for $400. You also bought 1 put option on Google with a strike of $395 for $20. What is the maximum loss on your position? What is the profit on your position when the stock hits $440?

  What are the days sales outstanding

McDowell Industries sells on terms of 3/10, net 30. Total sales for the year are $1,086,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 56 days after their purchases. Assume 365 days in year for ..

  Compare the investment conditions for foreign companies

Selecting articles from this site, compare the investment conditions for foreign companies wishing to invest in the European Union with the conditions for Brazil.

  What is the loans annual amount percentage rate

A couple planning to buy a home have found a $300,000 home available with the following mortgage loan options. (option a) the borrowers can obtain an 80 percent loan to value at a 3.5% interest rate with monthly payments amortized over 30 years and c..

  EAR is the same regardless of the length of the investment

You can earn $32 interest on a $1,000 deposit for 8 months. If the EAR is the same regardless of the length of the investment how much interest will you earn on a $1,000 deposit for:

  Compute the effect on mr monks agi

Compute the effect on Mr. Monk's AGI and taxable income of his painting revenue and expenses under each of the following assumptions: a. Mr. Monk earned $13,290 from sales of his paintings. This was the sixth consecutive year that the painting activi..

  The directors of uw plc are keen to attract internal

the directors of uw plc are keen to attract internal investment to support the expansion of sales.the company buys raw

  Competitors of a firm that you are analyzing

You have identified the following information for the competitors of a firm that you are analyzing. Given that the firm has 100M shares outstanding how much should it be worth in the market?

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