ABC Corporation bought 5 short futures. The contract size is 10,000 shares of Mining Inc. The strike price is P87 per share. If the market price of a share is P91 per share on the agreed date, ABC would have a total gain/(loss) from these contracts amounting to
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ABC Corporation bought 5 short futures. The contract size is 10,000 shares of Mining Inc. The strike price is P87 per share. If the market price of a share is P91 per share on the agreed date, ABC would have a total gain/(loss) from these contracts amounting to
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- 1,000 shares of Ayala Corp. Strike price is P300 per share. On the agreed date, the market value is P320 per share. How much is the gain/(loss) relating to the contract?ABC Corporation acquired an option to buy 5,000 shares of XYZ Corp. at a strike price of P300 on a later date. ABC paid a premium of P4,000. On the last day of the option, an XYZ Corp. stock is selling at P280 each. If ABC will be acquiring the XYZ stocks, how much should it pay?ABC entered into 3 short futures contracts for AC common shares. Each contract has a standard size of 1,000 shares and a total agreed price of P1,200. On the agreed date, the market value of an AC share is P1,180 Compute the net gain or (loss).
- Maynard Corporation buys 1,000 call options to buy 1,000 shares of Rossman, Inc., common stock on December 1, 20X1. At the time of the purchase, the option price is $5.00, the Rossman stock price is $30.00, and the exercise price is $32.00. On December 31, 20X1, the option price is $5.90 and the stock price is $36.00. Identify the derivative, the underlying, and the notional value. Assume that the derivative is accounted for as a stand-alone derivative. What journal entries would Maynard Corporation make during 20X1 to record the effects of the option purchase?Aylmer Inc paid $520 for a call to purchase 850 shares of Belmont Inc on April 1, Y3.The strike price was $26.50 per share and could be exercised anytime in the next 6 months.On April 1, Y3, the market price for one share of Belmont Inc. was $29.30. Belmont's stock price rose. On June 30, Y3, the price for Belmont stock was $31.55 per share.The fair value of the option on June 30, Y3 was $7,365. REQUIRED Prepare the appropriate entries under two different scenarios: 1) Aylmer exercised the option 2) Aylmer did not exercise the option (just the June 30th entry)Aylmer Inc paid $520 for a call to purchase 850 shares of Belmont Inc on April 1, Y3.The strike price was $26.50 per share and could be exercised anytime in the next 6 months.On April 1, Y3, the market price for one share of Belmont Inc. was $29.30.Belmont's stock price rose. On June 30, Y3, the price for Belmont stock was $31.55 per share.The fair value of the option on June 30, Y3 was $7,365. REQUIRED Prepare the appropriate entries under two different scenarios:1) Aylmer exercised the option2) Aylmer did not exercise the option (just the June 30th entry)
- Patient Investor Ltd has a diversified portfolio of shares. On 1 January 2020, the shares are worth $2,850,000. On this day, the company enters into 80 futures contracts on the All Ordinaries Index futures in which it takes a sell position. The All Ordinaries Index on 1 January 2020 is 2900 and the total price of futures contract is calculated as 2900 x 80 x $12 contracts = $2,784,000. A total deposit of $150,000 is paid to the broker on the futures contract and the broker requires a minimum deposit of $150,000 and this deposit must be maintained at the same level. On 5th February 2020, Smart Investor Ltd decided to sell its portfolio of shares and to close out its futures contract and recover its deposit from the broker. On this date, the market value of the share portfolio is $2,950,000 and the All Ordinaries Index is 3000 points. Required a. Briefly explain the difference between futures contracts for hedging and futures contract for speculation. b. Provide the journal…ABC Corporation plans to purchase a call option for 1,000 Red Corp. ordinary shares at a strike price of P489 per share. The contract will be exercisable four months from purchase. The details about the underlying asset are as follows: Market value per share 534.00 Volatility 10% Risk-free rate 3% If the call option is currently selling at P40,000, it is currently over or (under) valued by how much? Use 360 days in a year.ABC Co. bought 1,000 CALL options of XYZ Corporation with a strike price of ₱52 at ₱2.75 per option. If on the exercise date, the price of XYZ Corporation’s stock is ₱48, how much will be the net profit (or loss) of ABC Co.?a. ₱0b. ₱1,250c. (₱2,750)d. ₱4,000
- ABC Corporation bought a put option on XYZ Corp. P5,000,000-face value bonds for a premium of P25,000. The strike price is P5,100,000. 1. If on the exercise date of the option, the bonds were selling at P5,060,000, how much is the net gain/(loss) based on the information above? 2. If on the exercise date of the option, the bonds were selling at P5,200,000, how much is the net gain/(loss) based on the information above?An oil refining company enters into 1,000 long one- month crude oil futures contracts on NYMEX at a futures price of $43 per barrel. At maturity of the contract, the company rolls half its position forward into new one-month futures and closes the remaining half. At this point, the spot price of oil is $44 per barrel, and the new one-month futures price is $43.50 per barrel. At maturity of this second contract, the company closes out its remaining position. Assume the spot price is $46 per barrel. Ignoring interest, what are the company'’s gains or losses from its futures positions?Holder Ltd. purchases an options contract from Issuer Ltd. that gives Holder Ltd. the right to acquire 100,000 options in Torquay Ltd. for a price (exercise price) of $ 10.00 per share. When the contract was exchanged the price of Torquay Ltd. shares was $ 9.00 each. The option entitles Holder Ltd. to exercise the options and buy the shares any time within the next six months. If the options are not exercised within the six month period, then the options will expire. Need the answers to the followings; Determine whether a financial liability or financial asset exists from the perspectives of Holder Ltd. and Issuer Ltd. Further, if the price of shares in Torquay Ltd. falls to $ 5.00, with the result that it is improbable that Holder Ltd. will ever exercise the options, will this change the classification of the options as either financial assets or financial liabilities?