Amanda wants to become an industrial designer. She wants to learn this specialized skill from an expert in this industry by work
2 answers:
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Solution :
with the same exercise price.
X = exercise price = 50
1). Position to be taken :
-- buy 10 numbers of Put options with strike price of $ 50 per unit.
--- short (sell) 10 numbers of Call option with strike price of $ 50 per unit.
2). Cost of synthetic short position = ,
where, P = price of 1 put ption
C = price of 1 call option
The Call - Put parity equation :
Here, C = Call premium
X = strike price of call and Put
r = annual rate of interest
t = time in years
= initial price of underlying
P = Put premium
Therefore,
Here, t = 1, = 48, X = 50
So the cost of the position is given as :
Answer:
$37,760
Explanation:
The income for the current operation, without further processing, is given by:
If the product is further processed at a cost of $11,200, the company would sell 11,200 units at $31,80 each and 5,200 at $19.20 each, for an income of:
Therefore, the incremental net income of processing further would be:
The incremental net income would be $37,760.