is believed that Blue Co.’s stock price is going to decline from its current level of P88.50 anytime during the next 3 months. A 3-month put option can be bought for P625 which gives the buyer the right to sell 50 shares at a price of P90 per share. What would be the net profit if you bought a 50-share contract for P625 and Blue Co.’s stock price dropped to P75?

is believed that Blue Co.’s stock price is going to decline from its current level of P88.50 anytime during the next 3 months. A 3-month put option can be bought for P625 which gives the buyer the right to sell 50 shares at a price of P90 per share. What would be the net profit if you bought a 50-share contract for P625 and Blue Co.’s stock price dropped to P75?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 16P: Crisp Cookware’s common stock is expected to pay a dividend of $3 a share at the end of this year...

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Similar questions

The price of Outdoor Designs, Inc. is now 85. The company pays no dividends. Fred Gray expects the price four years from now to be 125 a share. Should Fred buy Outdoor Designs if he wants a 15 percent rate of return? Explain.
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The Bulldogs Inc.’s stock price is believe to decline from its current level of P125 anytime during the next 9 months. A 9-month put option for P975 is available to be purchased and it gives the buyer the right to sell 100 shares at a price of P130 per share. What would be the net profit if a 100-share contract is bought for P975 and Bulldogs Inc.’s stock price actually dropped to P90?
Suppose you believe that BVC Inc.’s stock price is going to decline from its current level of P92.50 sometime during the next 5 months. For P350.25 you could buy a 5-month put option giving you the right to sell 100 shares at a price of P94.00 per share. If you bought a 100-share contract for P350.25 and BVCl Inc.’s stock price actually dropped to P75.00, what would be your net profit (after transactions costs but before taxes)? Format: 1,111.11
ABC Co. believes that XYZ Corporation’s stock price is going to decline from its current level of ₱82.50 sometime during the next 5 months. For ₱510.25, ABC Co. could buy a 5 month put option for the right to sell 100 shares at a price of ₱83 per share. If ABC Co. bought a 100 share contract for ₱510.25 and XYZ Corporation’s stock price actually dropped to ₱63, what would be the net profit (after transactions costs but before taxes) of ABC Co.?a. ₱1,439.75b. ₱1,489.75c. ₱1,950.00d. ₱2,000.00e. ₱2,435.00
Suppose you believe that National Inc.’s stock price is going to decline from its current level of P92.50 sometime during the next 5 months. For P350.25 you could buy a 5-month put option giving you the right to sell 100 shares at a price of P94.00 per share. If you bought a 100-share contract for P350.25 and National Inc.’s stock price actually dropped to P75.00, what would be your net profit (after transactions costs but before taxes) Format: 1,111.11