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Investment & Instrument and StrategiesCalls PutsMay -85 $7.50 May-85 $1.50May 90 $4.20 May 90 $3.10May 95 $1.90 May 95 $5.90May May100 $0.70 100 $9.80The stock is trading at $91 per share
Create a covered write positiona. At what point, do you start to lose money?b. At what point to you make a maximum profit? What happens if the stock continues to increase?c. Is this a low or high volatility spread? What does volatility mean?
2) Create a vertical spreada. What is your maximum profit? At what point do you reach the maximum profit? What happens as the stock increases in value? b. What is your maximum loss? At what point do you reach the maximum loss? What happens if the stock continues to decrease in value? c. Compare a covered write to a vertical spread. What is the difference in return? What is the difference in risk? d. Is this a low or high volatility spread? What does volatility mean?
3) Create a straddle spread a. Above what point do you start making money if the stock goes up? b. Below what point do you start making money if the stock goes down? c. Where do you have a maximum loss? d. Why would you create a position like this? e. Is this a high or low volatility spread?
4) Create a vertical ratio spread a. If you have a credit from creating the spread (the value of what you sold is greater than what you bought) what is your profit or loss if the stock goes down? b. Where do you make your maximum profit? c. Above what point do you start to lose money? d. Is this a high or low volatility spread.
Describe some of the short-term investment vehicles that you use to manage your cash resources. Why did you elect these vehicles over the alternatives? What are their primary advantages and disadvantages?
You just received $225,000 from an insurance settlement. You have decided to set this money aside and invest it for your retirement. Currently, your aim is to retire 25 years from today.
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Weisbro and Sons common stock sells for $51 a share and pays an annual dividend that increases by 4.0 percent annually. The market rate of return on this stock is 9.70 percent. What is the amount of the last dividend paid by Weisbro and Sons?
You are provided the following data on a firm. The total market value is $40 million. The capital structure, demonstrate here, is considered to be optimal.
Susan Young is an attorney for a small law company in Arizona. She is also a part-time inventor and an avid golfer. One day Susan's golf foursome included a man named Henry Jones, a manufacturer of Christmas jewelry.
The realized portfolio return is weighted average of the relative weights of securities in the portfolio multiplied by their respective expected returns.
What strategic paths can Starbucks pursue its objectives as becoming the most respected and recognized brands in the world?
Say you own an asset that had a total return last year of 12.0 percent. If the inflation rate last year was 7.5 percent, what was your real return?
Historically high return stocks have exhibited lower risk than low return stocks - while the smart money knows this and is able to effectively arbitrage excess returns from low risk stocks? To what extent does this make sense? Discuss and elaborate..
Client is thinking additional equity as an addition to a portfolio of equities. The stock recently paid a dividend of $3.00 (Do=3.00). The current price of stock is $41.25. Jay requires a 28 percent return on this stock.
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