At October expiration the stock is $70 per share. Algebraically find their profit/loss, i.e. their P&L. Y = per share quoted price. Profit or loss?

SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
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Chapter13: Corporations: Earning & Profits And Distributions
Section: Chapter Questions
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1) Betty and Bob buy 2 October 60 Calls @$7 and sell 3 October 65 Calls @$4.
At October expiration the stock is $70 per share. Algebraically find their
profit/loss, i.e. their P&L.
Y =
per share quoted price. Profit or loss?
2) Betty invests $4,000 at 10% per annum compounded semiannually. Bob
invests $10,000 at 7% per annum continuously compounded. Algebraically
find how many years it will take for their accounts to be of equal value.
What is this account value? Your final answer should be correct to 3 places
after the decimal point.
A. It will take
years. B. The value is
Transcribed Image Text:1) Betty and Bob buy 2 October 60 Calls @$7 and sell 3 October 65 Calls @$4. At October expiration the stock is $70 per share. Algebraically find their profit/loss, i.e. their P&L. Y = per share quoted price. Profit or loss? 2) Betty invests $4,000 at 10% per annum compounded semiannually. Bob invests $10,000 at 7% per annum continuously compounded. Algebraically find how many years it will take for their accounts to be of equal value. What is this account value? Your final answer should be correct to 3 places after the decimal point. A. It will take years. B. The value is
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