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Ludmilka [50]
3 years ago
5

The ABC Company expects stock prices to decrease. The current stock price is $96. The company purchases a put option, with exerc

ise price of $93 and a premium of $3 per share. Just before the expiration, stock price rises to $91. Should the investor exercise the put option or not? What will the total payoff per share be?
Business
1 answer:
Talja [164]3 years ago
6 0

Answer:

Payoff = $2 per share.

Explanation:

In a put option, the long (the party that buy the put) will have gain on the option when the underlying asset price is lower than the excercise price of that asset <em>(imagine the advantage that you can sell a chicken at $12 when it market price of is is only 10)</em>.

Because the stock price is $91, lower than exercise price of 93, so the company should exercise the put. Total payoff per share is 93 - 91 = $2.

<em>Note: We dont include premium to buy the put here because the question asking about payoff. We on include premium in calculations when the question is about profit.</em>

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Cameron has applied for a loan to expand his young business. When bankers look for evidence of whether he will be able to repay
Readme [11.4K]

Answer:

what Cameron's firm has done in the past.

Explanation:

Small businesses do request for loans in some cases when they aim at using borrowed funds as capital to become more profitable in their business. When such requests are made, the bank can decide to look at what has been done in the past by the firm to ascertain if they can be able to repay the loan. They usually look at the current and past loans (If any) and debts that have been incurred by the business. In some cases, they also examine the bank accounts the business won and their tax IDs, etc.  

3 0
3 years ago
Southern Home Cooking just paid its annual dividend of $.75 a share. The stock has a market price of $16.80 and a beta of 1.14.
SIZIF [17.4K]

Answer:

The multiple choices are:

9.98 percent

10.04 percent

10.79 percent

10.37 percent

10.45 percent

The third option of 10.79% is correct

Explanation:

The cost of equity according to Miller and Modgiliani capital asset pricing model is given below:

Ke=Rf+beta*(Mrp-Rf)

Rf is the risk free rate which is the return on government security is 2.7%

beta is 1.14

Mrp is the market risk premium is 7.1% which is given in the formula as (Mrp-Rf)

Ke=2.7%+1.14*7.1%

Ke=2.7%+8.09%

Ke=10.79%

Hence the correct option out of the options given above is the third option

It is expected that any shareholder that invests in the shares of Southern Home Cooking would get return of 10.79%

8 0
3 years ago
Which of the following is not one of the steps for recognizing revenue? Identify the performance obligations of the contract. Id
9966 [12]

Answer:

The answer is letter "D": Estimate the total transaction price of the contract based on the sum of the stand-alone selling prices of the goods.

Explanation:

There are five steps for revenue recognition established by the Financial Accounting Standards Board (<em>FASB</em>) which are: <em>Identifying the contract with a customer; Identifying the performance obligations in the contract; Determining the transaction price; Allocating the prices to the performance obligations </em>and<em>; Recognizing revenue.</em>

In that sense, estimating the total transaction price of the contract based on the sum of the stand-alone selling prices of the goods has nothing to do with it.

4 0
3 years ago
Marissa's job allows her to wear jeans and t-shirts to the office. This is most likely a(n) _____ atmosphere.
Triss [41]
Informal atmosphere because wearing jambs and a t-shirt is not formal
3 0
3 years ago
Meg, who is on the lookout for a temporary security officer, approaches a security agency. The agency sends one of its reserve s
elena55 [62]

Answer:

The correct option is: B. Implied-in-fact contract

Explanation:

The implied-in-fact contract is a type of implied contract that contains obligations in the form of mutual agreement. Such an agreement is <u>not expressed or stated in the form of words.</u>

This type of contract is based on the understanding between the involved parties and are implied from the facts and circumstances that expresses the mutual intent of the parties to contract.

<u>Therefore, Meg has entered into an </u><u>implied-in-fact contract </u><u>with the security agency.</u>

8 0
3 years ago
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