A trader creates a long butterfly spread from options with strike prices $60, $65, and $70 by trading a total of 400 options. Th
1 answer:
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Answer:
correct option is b. $0.100
Explanation:
given data
Group 1 = 2,500 pieces that expected sell = $0.25 each.
Group 2 = 5,500 pieces that expected sell = $0.60 each.
Group 3 = 500 pieces that expected sell = $1.20 each
company paid =$1,800
received = 8,500 pieces
to find out
cost per item in Group 1
solution
we get here sale value for all 3 groups that is
sale value for group 1 = 2500 × 0.15 = $375
sale value for group 2 = 5500 × 0.36 = $1980
sale value for group 3 = 500 × 0.72 = $360
so total sale value will be here as
total sale value = $375 + $1980 + $360
total sale value = $2715
now we get here % sale that is for group 1
% sale for group 1 =
% sale for group 1 = 13.81 %
and cost is here $1800
and proportion of cost for group 1 will be
proportion of cost = 1800 × 13.81%
proportion of cost = $248.58
and
cost per unit will be here as
cost per unit =
cost per unit = 0.10
so correct option is b. $0.100