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Rufina [12.5K]
3 years ago
10

An investor with no other positions buys 1 dwq jun 60 call at 3.50. if the investor exercises the call when the stock is trading

at 68 and immediately sells the stock in the market, what is the investor's profit or loss?
a.$450 profit.
b.$350 profit.
c.$450 loss.
d.$350 loss.
Business
1 answer:
miskamm [114]3 years ago
6 0
Answer: $450 profit  
The investor exercised the right to buy the stock for 60 and can sell the stock in the market for 68 for an $8 per-share gain.  
The gain of 8 minus the premium of 3.50 gives the investor a profit of 4.50
(4.50 Ă— 100 = $450).
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Answer:

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Explanation:

This means that there is an increase in cash(cash has been collected). And for the unearned revenue which is a liability, there is an increase in the liability.

Note: Debit side increases asset(cash) and expenses while credit side decreases liability,income and equity.

Credit side decreases asset(cash) and expenses while debit side increases liability,income and equity.

7 0
2 years ago
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Answer:

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Explanation:

We can easily calculate the expected value and expected profit/loss in this situation by some minor working

Expected values = Expected Claim - per policy cost

Expected profit/loss = (Expected claim - per policy cost) x number of policies

As you can see per policy cost and no of policies are given in the question data we just need to find expected claim for calculation of expected profit or loss and expected value

Expected Claim = (1/100x$10,000)+(1/250x$40,000)+(1/400x$80,000)

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Expected Claim = 460

Now we have a value of expected claim lets put it into Expected profit/loss formula and expected value formula

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