Under the circumstances when the stock price rises

Assignment Help Financial Management

Reference no: EM131346600

1. What is your profit or loss under the following circumstances when the stock price rises? You buy a stock at $15 and simultaneously buy a put. The strike price on the put is $12, and you pay a $5 premium. The stock price rises to $16.

A. $5 loss C. $2 profit B. $4 loss D. $3 profit

2. What is your loss in the following situation? You write a naked put when the stock price is $50. The strike price is $55, and the stock price drops to $40. Assume the option is near expiration and the market doesn’t assign any additional value to the option’s intrinsic value.

A. $10 C. $20 B. $15 D. $35

Reference no: EM131346600

Questions Cloud

After the phase-out for high-income taxpayers : Ellen and Rick are married with one dependent child. They have AGI of $355,300, and itemized deductions consisting of $20,000 state income taxes and $20,000 medical expenses, after applying the 10 percent of AGI limitation. Compute the following for ..

Calculate cost variance and schedule variance : Calculate cost variance (CV). Based on this information, is the project over or under budget? Explain. Calculate schedule variance (SV). Based on this information, is the project ahead or behind schedule? Explain. Calculate cost performance efficienc..

Initial cost company would be willing to pay for project : Och, Inc., is considering a project that will result in initial aftertax cash savings of $1.85 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. What is the maximum initial cost the compan..

Fixed-rate debt-what is resulting net payment : Zhao Automotive issues fixed-rate debt at a rate of 7.00%. Zhao agrees to an interest rate swap in which it pays LIBOR to Lee Financial and Lee pays 6.8% to Zhao. What is Zhao’s resulting net payment?

Under the circumstances when the stock price rises : What is your profit or loss under the following circumstances when the stock price rises? You buy a stock at $15 and simultaneously buy a put. The strike price on the put is $12, and you pay a $5 premium. What is your loss in the following situation?..

Target corp recently earned profit-ratio remained unchanged : Target Corp (TGT) recently earned a profit of $3.57 earnings per share and has a P/E ratio of 17.3. The dividend has been growing at a 14 percent rate over the past few years. If this growth continues, what would be the stock price in five years if t..

Consider the characteristics of the three stocks : Consider the characteristics of the following three stocks: T& Company, Expected Return = 18%; Standard Deviation = 25% A& Company, Expected Return = 12%; If you can pick only two stocks for your portfolio, which would you pick? Why?

Different risk premiums lead to different stock prices : Explain why do different risk premiums lead to different stock prices?

What is the journal entry to record the tax accrual : Wingo Inc. which has a 34 percent income tax rate ( also assume this is the applicable tax rate) is considering making a substantial investment in marketable securities that will generate annual income of $400,000. Analyze each of the following four ..

User Account

All Pages