It 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? *

It 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? *

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Description: It is believed that Blue Co.s stock price isgoing to decline from its current level ofP88.50 anytime during the next 3 months. A3-month put option can be bought for P625which gives the buyer the right to sell 50shares at a price of P90 per share. Wh

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 2P

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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?
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 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
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
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Meadow Dew Corporation currently has an EPS of $2.30, and the benchmark PE for the company is 22. Earnings are expected to grow at 5 percent per year. a. What is your estimate of the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the target stock price in one year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. Assuming the company pays no dividends, what is the implied return on the company’s stock over the next year?
Arcs and Triangles paid an annual dividend of $1.47 a share last month. The company is planning on paying $1.52, $1.58, and $1.60 a share over the next three years, respectively. After that, the dividend will be constant at $1. 79 per share per year. What is the market price of this stock if the market rate of return is 10.0 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)