Assume you have USD $100,000 of cash to buy the following stock at week 1 price. What is the weekly update on your portfolio given the end of week price. What is the closing portfolio worth in week 10. Assuming 0.5% transaction cost. Show all workings Week 1 2 3 4 5 6 7 8 9 10 91.86 Ś 82.20 85.2 83.12 86.84 87.83 85.13 85.25 91.69 88.86 Transaction 0.5%

Assume you have USD $100,000 of cash to buy the following stock at week 1 price. What is the weekly update on your portfolio given the end of week price. What is the closing portfolio worth in week 10. Assuming 0.5% transaction cost. Show all workings Week 1 2 3 4 5 6 7 8 9 10 91.86 Ś 82.20 85.2 83.12 86.84 87.83 85.13 85.25 91.69 88.86 Transaction 0.5%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section20.A: The Black-scholes Option Pricing Model

Problem 1P

See similar textbooks

Similar questions

Your broker mailed you your year-end statement. You have P250,000 invested in Happy Chemical, P180,000 tied up in Honey Pie Co., P360,000 in Sweet Candy and P110,000 in MyBabeCorp. The annualized returns for thee stock is 16.5% for Happy; 12% for Honey; 18.5% for Sweet and 15.3% for MyBabe. What is the return of your entire portfolio?
On July 1, an investor holds 50,000 shares of a certain stock. The market price is $30 per share. The investor is interested in hedging against movements in the market over the next month and decides to use the September Mini S&P 500 futures contract. The index is currently 1,500 and one contract is for delivery of $50 times the index. The beta of the stock is 1.3. What strategy should the investor follow to reduce beta to 0?
In July, a company has a portfolio of stocks worth $100 million. The beta of the portfolio is 1.2. The company would like to use the December futures contract on a stock index to change beta of the portfolio to 0.5 during the period July to November. The index is currently 1,000, and each contract is on $250 times the index. What position should the company take? Short 280 contracts Short 680 contracts Long 280 contracts Long 680 contracts
On July 1, an investor holds 50,000 shares of a certain stock. The market price is $30 per share. The investor is interested in hedging against movements in the market over the next month and decides to use the September Mini S&P 500 futures contract. The index is currently 1,500 and one contract is for delivery of $50 times the index. The beta of the stock is 1.3. What strategy should the investor follow? Under what circumstances will it be profitable?
Refer to the following chart. An investor (a day trader) always buys 500 shares of stock at the market close price and sells them at the last sale price, paying a $30 commission per transaction. The stock the trader bought is MSLV. (a) Find the total cost.$ (b) Find the return for the day.$ (c) Find the percent of return. (Round your answer to one decimal place.)
On July 1, an investor holds 50,000 shares of a certain stock. The market price is $30 per share. The investor is interested in hedging against movements in the market over the next month decides to use the September Mini S&P 500 futures contract. The index is currently 1,500 and one contract is for delivery of $50 times the index. The beta of the stock is 1.3. What strategy should the investor follow? Under what circumstances will it be profitable?explain it
On 1st of May, an investor holds 80 000 shares of a Yahoo. The market price is $87 per share. The investor is interested in hedging against movements in the market over the next month and decides to use the August S&P 500 futures contract. The index is currently at 2800 and one contract is for delivery of $50 times the index. The beta of the stock is 0.75. What is the number of contracts that should be hedged and the type of hedging strategy should the investor follow? Choose the right answer: a. 37 contracts should be longed b. 4 contracts should be longed c. 4 contracts should be shorted d. 37 contracts should be shorted
On July 1, an investor holds 50,000 shares of a certain stock. The market price is $30 per share. The investor is interested in hedging against movements in the market over the next month and decides to use the September Mini S&P 500 futures contract. The index is currently 1,500 and one contract is for delivery of $50 times the index. The beta of the stock is 1.3. What strategy should the investor follow?
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.)
P8-3 Portfolio Return At the beginning of the month, you owned $12,000 of FordMotor, $18,000 of Netflix, and $20,000 of Wayfair. The monthly returns for Ford Motor,Netflix, and Wayfair were 1.50 percent, 1.0 percent, and − 1.50 percent. What is yourmonthly portfolio return? What is your effective annual portfolio return? To solve, first you must calculate each stock’s weight of the total portfolio.Times that weight for the stock’s contribution to the portfolio return, thensum all three stocks
A manager buys three shares of stock today, and then sells one of those shares each year for the next three years. His actions and the price history of the stock are summarized below. The stock pays no dividends. Time Price Action 0 $ 90 Buy 3 shares 1 100 Sell 1 share 2 100 Sell 1 share 3 100 Sell 1 share Required: a. Calculate the time-weighted geometric average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
A manager buys three shares of stock today, and then sells one of those shares each year for the next 3 years. His actions and the price history of the stock are summarized below. The stock pays no dividends. Time Price Action 0 $ 150 Buy 3 shares 1 180 Sell 1 share 2 180 Sell 1 share 3 180 Sell 1 share Required: a. Calculate the time-weighted geometric average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Calculate the time-weighted arithmetic average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the dollar-weighted average return on this portfolio. (Do not round intermediate calculations. Round your answer to 2 decimal places.)