Current market price of ABC stock = $77 ABC stock price after 30 days = $80 ABC stock price after 45 days = $95 ABC stock price after 60 days = $80 ABC stock price after 75 days = $85 ABC stock price after 90 days = $70 Current price of European call on ABC stock with exercise price of $93 with 90 days to expiration = $2 Current price of European put on ABC stock with exercise price of $82 with 60 days to expiration = $6 Risk-free rate = 5% 1. The payoff to the put option holder on Day 30 is closest to: A. Zero В. $2 C. -$2

Current market price of ABC stock = $77 ABC stock price after 30 days = $80 ABC stock price after 45 days = $95 ABC stock price after 60 days = $80 ABC stock price after 75 days = $85 ABC stock price after 90 days = $70 Current price of European call on ABC stock with exercise price of $93 with 90 days to expiration = $2 Current price of European put on ABC stock with exercise price of $82 with 60 days to expiration = $6 Risk-free rate = 5% 1. The payoff to the put option holder on Day 30 is closest to: A. Zero В. $2 C. -$2

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Current market price of ABC stock is $77 ABC Stock price after 30 days =$80 ABC Stock price after 45 days =$95 ABC Stock price after 60 days =$80 ABC Stock price after 75 days =$85 ABC Stock price after 90 days =$70 Current price of European call on ABC stock with exercise price of $93 with 90 days to expiration =$2 Current price of European put on ABC stock with exercise price of $82 with 60 days to expiration =$6. Risk free rate is 5%. The price of the European call option with an exercise price of 82 and 30 days remaining expiration would be closest to A.$1.33 B.$4.90 C.$1.03
13. Current market price of ABC stock is $77 ABC Stock price after 30 days =$80 ABC Stock price after 45 days =$95 ABC Stock price after 60 days =$80 ABC Stock price after 75 days =$85 ABC Stock price after 90 days =$70 Current price of European call on ABC stock with exercise price of $93 with 90 days to expiration =$2 Current price of European put on ABC stock with exercise price of $82 with 60 days to expiration =$6. Risk free rate is 5%. At t= 45, the minimum value of the put option is closest to A.$0 B.$13 C.$13.16
Both a call and a put currently are traded on stock XYZ; both have strike prices of $60 and expirations of 6 months.a. What will be the profit to an investor who buys the call for $5 in the following scenarios for stock prices in 6 months? (i) $40; (ii) $45; (iii) $50; (iv) $55; (v) $60. b. What will be the profit to an investor who buys the put for $7 in the following scenarios for stock prices in 6 months? (i) $40; (ii) $45; (iii) $50; (iv) $55; (v) $60
Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and expirations of six months. Required: a. What will be the profit/loss to an investor who buys the call for $4 in the following scenarios for stock prices in six months? (Loss amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) stock price profit/loss $ 40.00 $ 45.00 $ 50.00 $ 55.00 $ 60.00 b. What will be the profit/loss in each scenario to an investor who buys the put for $6? (Loss amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
Both a call and a put currently are traded on stock XYZ; both have strike prices of $49 and expirations of six months. Required: a. What will be the profit/loss to an investor who buys the call for $4.25 in the following scenarios for stock prices in six months? (Loss amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) b. What will be the profit/loss in each scenario to an investor who buys the put for $7.10? (Loss amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
Stock ABC is currently standing at £1,508. Consider the corresponding stock options that expire in 90 days. The current Treasury Bills have a risk-free annual rate 2 percent. On the market, the calls and puts listed for ABC have an exercise price of £1,550. (a) Assume there are no dividends paid for stock ABC. (i) Explain the payoff diagrams for the put & call options for both European options and American options. Explain whether an increase in volatility would have impacts on profits/payoffs diagrams of puts on stock ABC. If you are a hedger, why would you continue to buy such put options with increased uncertainty? Explain.
Consider a stock with current price S0 = 29 per share. A european call option on this stock that matures in T = 3 months with strike K = 30 costs PC = 2.9 per share. You are considering two ways to invest 58. Plan A is to buy 58 /29 = 2 shares of the stock and sell them in 3 months. Plan B is to buy 58 / 2.9 = 20 call options on the stock. If ST denotes the stock price per share in 3 months, plan B has higher payoff (a) for any ST > 0 (b) if ST < 29 (c) if 29 < ST < 30 (d) if ST > 30 (e) if ST > 33.33
Please answer both questions What is the risk premium for the stock in the table below? The risk free rate is 1.05% and the market risk premium is 5.41%. What is the expected return based on CAPM for the stock in the table below? The risk free rate is 1.05% and the market risk premium is 5.41%. The Home Depot, Inc. (HD) NYSE - NYSE Delayed Price. Currency in USD 264.55 -0.26 (-0.10%) At close: December 11 4:00PM EST summary Company Outlook Chart Conversations Stal Previous Close 264.81 Market Cap 284.815B Open 263.36 Beta (5Y Monthly) 1.05 Bid 264.15 x 1000 PE Ratio (TTM) 22.88 Ask 264.55 x 800 EPS (TTM) 11.56 Day's Range 262.65 - 265.36 Eamings Date Feb 23, 2021 52 Week Range 140.63 - 292.95 Forward Dividend & Yield 6.00 (2.27%) Volume 3,454,512 Ex-Dividend Date Dec 02, 2020 Arg. Volume 3,631,762 ly Target Est 305.06
Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and expirations of 6 months.a. What will be the profit to an investor who buys the call for $4.8 in the following scenarios for stock prices in 6 months? (i) $40; (ii) $45; (iii) $50; (iv) $55; (v) $60. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round your answers to 1 decimal place.) stock price profit i. $40 ii. $45 iii. $50 iv. $55 v. $60 b. What will be the profit to an investor who buys the put for $7.5 in the following scenarios for stock prices in 6 months? (i) $40; (ii) $45; (iii) $50; (iv) $55; (v) $60. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Round your answers to 1 decimal place.) stock price profit i. $40 ii. $45 iii. $50 iv. $55 v. $60
Market Data Risk-Free Rate (Annualized) 0.025 Vokinar Corporation Stock Price $55.00 Dividend Yield 0.03 Standard Deviation 0.45 Exercise Price $50.00 Maturity (Years) 0.25 Required: Using the Black-Scholes option pricing formula and the data above, please calculate the price of the European call and put for this share of stock. (Use cells A3 to B10 from the given information to complete this question.) Vokinar Corporation d1 d2 N(d1) N(d2) Call Price Put Price
Analogue Technology has preferred stock outstanding that pays a $18.80 annual dividend. It has a price of $204. What is the required rate of return (yield) on the preferred stock? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
A stock is selling today for $110. The stock has an annual volatility of 64 percent and theannual risk-free rate is 7 percent.a. Calculate the fair price for a 1-year European call option with an exercise price of $95.b. Calculate how much the current stock price would need to change for the purchaser ofthe call option to break even in one year.c. Calculate the fair price for a 1 year European put option with an exercise price of $95

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