Answered: a. Call option, X = 140 b. Put option,…

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a. Call option, X = 140 b. Put option, X= 140 c. Call option, X= 145 d. Put option, X= 145 Payoff Profit/Loss

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 76E

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Question

Refer to Figure 15.1, which lists the prices of various Microsoft options. Use the data in the figure to calculate the payoff and the profit/loss for investments in each of the following November 2019 expiration options on a single share, assuming that the stock price on the expiration date is $143. (Loss amounts should be indicated by a minus sign. Round "Profit/Loss" to 2 decimal places.)

Microsoft (MSFT)
Expiration
November 15, 2019
November 15, 2019
November 15, 2019
December 20, 2019
December 20, 2019
December 20, 2019
Strike
135
140
Underlying stock
price = $139.69
Call
6.78
3.60
145
1.50
135
7.93
140 4.88
145
2.71
Put
1.89
3.70
6.65
3.28
5.30
8.10

a. Call option, X = 140
b. Put option, X = 140
c. Call option, X = 145
d. Put option, X = 145
Payoff
Profit/Loss

Definition Definition Amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item

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