What is your net profit on the option if pfizers stock price

Assignment Help Financial Management
Reference no: EM131464110

You have purchased a put option on Pfizer common stock. The option has an exercise price of $42 and Pfizer’s stock currently trades at $44. The option premium is $0.90 per contract.

a. What is your net profit on the option if Pfizer’s stock price does not change over the life of the option? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Net profit $ per share

b. What is your net profit on the option if Pfizer’s stock price falls to $36 and you exercise the option? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Net profit $ per share

Reference no: EM131464110

Questions Cloud

What is the approximate and the exact real rate of interest : If Treasury bills are currently paying 6.4 percent and the inflation rate is 1.5 percent, what is the approximate and the exact real rate of interest?
What must the coupon rate be on the bonds : Volbeat Corporation has bonds on the market with 12 years to maturity. What must the coupon rate be on the bonds?
Return on real assets from market data on financial assets : We must estimate required rates of return on real assets from market data on financial assets,
What is the current bond price : If the YTM on these bonds is 9.7 percent, what is the current bond price?
What is your net profit on the option if pfizers stock price : What is your net profit on the option if Pfizer’s stock price does not change over the life of the option?
Purpose of your investment and type of investment in detail : describe the purpose of your investment and type of investment in detail. Draw timeline for Present Value of Ordinary Annuity with explanation.
Find the cash value of the lottery jackpots : Find the cash value of the lottery jackpots
Position in treasury bond futures contracts : Dudley Savings Bank wishes to take a position in Treasury bond futures contracts, which currently have a quote of 114 - 100.
Determine the amount of deferred taxes to be reported : Determine the amount of deferred taxes to be reported on the balance sheet at the end of 2018.

Reviews

Write a Review

Financial Management Questions & Answers

  Diminishing marginal utility of wealth

Last year, Alice's wealth increased by $X and it gave her z units of happiness (or utility). This year Alice's wealth increased again by $X but her utility went up by less than z units. What is this an example of? Diminishing marginal utility of weal..

  BEA is considering change in capital structure

Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 million shares outstanding. What is BEA's unlevered be..

  The bond investment decisions of dave and marlene carter

Dave and Marlene Carter live in the Boston area, where Dave has a successful orthodontics practice. Dave and Marlene have built up a sizable investment portfolio and have always had a major portion of their investments in fixed-income securities. Wha..

  What was the firms cash flow to creditors

The December 31, 2013, balance sheet of Schism, Inc., showed long-term debt of $1,390,000, and the December 31, 2014, balance sheet showed long-term debt of $1,560,000. The 2014 income statement showed an interest expense of $93,000. What was the fir..

  What is bobs cost of preferred stock

Bobs stuff, INC has preferred stock with a stated dividend of $3.57, which is currently trading at 25.6 per share. Bob bleives he can sell shares at that cost, but with flotation costs at 7% of the selling price. What is Bobs cost of preferred stock?

  Republican party economic platform during the civil war era

What were the key elements of the Republican Party economic platform during the Civil War era? Give examples of legislation passed by Republicans during the Civil War and Reconstruction that had economic implications. Why were they important?

  What is degree of operating leverage given level of output

Consider a four-year project with the following information: initial fixed asset investment = $590,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34; variable costs = $26; fixed costs = $230,000; quantit..

  They both plan for retirement and annual contribution

Bob and Lisa are both married, working adults. They both plan for retirement and consider the $2,000 annual contribution a must. First, consider Lisa’s savings. She began working at age 20 and began making an annual contribution of $2,000 at the firs..

  Find the current value of the option

Determine whether an American version of the option, also limited to a maximum payout of $40, would have any additional value over the European version.

  Interest rates are currently very low compared to historic

Interest rates are currently very low compared to historic averages and there doesn't seem to be much pressure for them to move up in the near future.

  How much will audreys balloon payment be in eight years

Audrey Sanborn has just arranged to purchase a $530,000 vacation home in the Bahamas with a 20 percent down payment. The mortgage has a 5.9 percent stated annual interest rate, compounded monthly, and calls for equal monthly payments over the next 30..

  Limited-pay whole life insurance policy

If a limited-pay whole life insurance policy is determined to be a “MEC” (Modified Endowment Contract): Select one: a. cash value increases cease immediately b. distributions, including policy loans, will likely be includable in income c. death benef..

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