Answer: C) -0.5
Explanation:
So first we take down the information we where given;
lets say
x = 50
SO = 50
therefore
uSO = ( 50 * ( 1 + 0.1) = (50 * 1) = 55
dSO = ( 50 * ( 1 - 0.1) = (50 * 0.9) = 45
SO
Pd = (x - dS0) = 50 - 45 = 5
Pu = (x - uSO) = 50 - 55 = (-5) because its negative, its = 0
now to get the HEDGE RATIO
we say HEDGE RATIO = (Pu - Pd) / ( uSO - dSO)
HEDGE RATIO = ( 0 - 5) / ( 55 - 45)
HEDGE RATIO = -5 / 10
HEDGE RATIO = -0.5
Im so sure but I can help you later just give me a few minutes
Answer:
If John's Pizzeria is located in an area of high demand and he is not selling his pizzas, it means that he is doing something wrong. There are two possible options:
- the price is too high: John should try to lower the price of his pizza. Currently John has a surplus production of pizza, because he is producing much more pizza than what he is actually selling. To increase his sales, John should try to lower the price and see how many pizzas he sells at $5, or even at $4. The only way that John can reach an equilibrium between his supply of pizza and the quantity demanded is to lower the price.
- the pizza tastes terrible: the only option is to make a better pizza.
Answer:
JOURNAL
1. Cash a/c... Dr. 350000
To C's Capital a/c 200000
To Premium for Goodwill a/c 150000
(Being capital and premium for goodwill brought in by C)
2. Premium for Goodwill a/c... Dr. 150000
To A's Capital a/c 110000
To B's Capital a/c 40000
(Being premium for goodwill distributed among the partners in the ratio of 11:4)
3. A's Capital a/c.... Dr. 55000
B's Capital a/c.... Dr. 20000
To Cash a/c 75000
(Being half of the premium for goodwill withdrawn by the partners)
Calculation of sacrificing ratio:
A's sacrifice= 3/5- 2/7= 11/35
B's sacrifice= 2/5- 2/7= 4/35
Sacrificing ratio= 11:4
Answer:
The rate of return on the investment if the price fall by 7% next year is -22% which is shown below.
The price of Telecom would have to fall by $71.43($250-$178.57), before a margin call could be placed.
Lastly,if the price fall immediately,the margin price would $178.57 as shown below
Explanation:
Total shares bought=$40000/$250=160 shares
Interest on amount borrowed=8%*$20000=$1600
When the price falls by 7% the new price =$250(1-0.07)=$232.50
Hence rate of return=(New price*number of shares-Interest-total investment)/initial investor's funds
=($232.50*160-$40000-$1600)/$20000=-22%
Initial margin=investor's money/total investment=$20000/$40000=50%
maintenance margin=30%
Margin call price=Current price x (1- initial margin)/ (1- maintenance margin)
=$250*(1-0.5)/(1-0.3)
=$178.57