Answer:
To create the collar, the customer would: <u>buy 1 PHLX 59 SF Call and sell 1 PHLX 61 SF Call.</u>
Explanation:
The meaning of a "collar" is that a put is bought at a strike price that is less than the price of the underlying instrument (this implies that a floor has been put on the price of the instrument); and that a call is disposed at a strike price which is higher than the price of the underlying instrument (this indicates that a ceiling above which the instrument will be called away has been created).
When a collar is put on the price, it indicates that the customer is majorly giving a guarantee for the underlying instrument's minimum and maximum price.
This should make the net cost of the collar to be close to zero due to the fact that the two contracts are "out the money" and also because the premium paid to buy the put is offset by the premium received when the call was sold.
Therefore, since customer in the question wishes to place a collar on the position using PHLX SF FLEX options, he would <u>buy 1 PHLX 59 SF Call and sell 1 PHLX 61 SF Call</u> to create the collar.
Answer:
Today, the investment is worth $31,997.29
Explanation:
Giving the following information:
An investment offers $5,900 per year for 15 years, with the first payment occurring one year from now. The required return is 6 percent
First, we need to calculate the final value, using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual pay= 5,900
n= 15
i= 0.06
FV= {5,900*[(1.06^15)-1]} / 0.06= $137,328.22
Now, we can determine the present value:
PV= FV/ (1+i)^n
PV= 137,328.22/ 1.06^25= $31,997.29
Answer:
$79,800
Explanation:
Depreciation expense using the activity method = (actual hours of use in a given period / total estimated hours of use ) × ( Cost of asset - Salvage value)
(1500/10,000) × ($560,000 - $28,000) = $79,800
I hope my answer helps you.
The answer is; "these sites have <span>increased the cross-price elasticity for substitute products".
</span>
When we evaluate the responsiveness
of the demand for any good towards the change in the price of a related good
is known as cross price elasticity of demand and it is
always measured in terms of percentage.
Answer:
False
Explanation:
A firm should end production and shut down only when its total revenue falls below variable costs, because at this point, production will bring about more losses, compared to if the company isn't producing at all.
<u>If total revenue exceeds and can cover its variable cost, a firm should remain in operation in the short run</u> (even if it is incurring losses), as this contributes to paying off the firm's fixed costs.
