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weqwewe [10]
4 years ago
8

A customer buys 5 ABC Jan 30 Straddles for a total premium of $3,500. Just prior to expiration ABC stock closes at $21, and the

customer closes the options positions at intrinsic value.
The customer will have a:

A. $1,000 gain
B. $1,000 loss
C. $3,500 gain
D. $3,500 loss
Business
1 answer:
xeze [42]4 years ago
8 0

Answer:

A) $1,000 gain

Explanation:

When a client buys a straddle, he is purchasing a call and a put option on the same stock with the same strike price and expiration date.

this client bought 5 ABC Jan 30 calls  and 5 ABC Jan 30 puts:

each contract was worth $700 (= $3,500 / 5 contracts)

If the price of the stock fall below $30, the call option will not be taken, but the put option will be enforced. Since the value of the stock is $21, this means that the put option resulted in a $900 profit (= ($30 - $21) x 100).

The client paid $700 for each option, therefore his profit per option = $900 - $700 = $200

His total profit = $200 x 5 options = $1,000

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A property was purchased two years ago for $300,000; the investor just sold the property for $379,000. What was the percentage o
ikadub [295]

Answer:

percentage of profit is 26.3%

Explanation:

given data

purchase property cost = $300,000

time = 2 year ago

sold  property = $379,000

solution

we get here percentage of profit in relation to the cost

first we get here percentage value increase  that is

percentage value increase = \frac{379000}{300000}

percentage value increase = 1.263

percentage value increase = 126.3%

so here 1 in 1.263 represent you the original cost

so profit % = 1 - 1.263

profit % = 26.3%

3 0
3 years ago
Exercise 1-16 Cost Classifications for Decision Making [LO1-5] Warner Corporation purchased a machine 7 years ago for $383,000 w
elena-s [515]

Answer:

Missing word <em>"2. What is the total sunk cost regarding the decision to buy the model 200 machine rather than the model 300 machine? 3. What is the total opportunity cost regarding the decision to invest in the model 200 machine?"</em>

<em />

1. Differential cost of buying model 200 machine = Cost of model 200 machine - Cost of model 300 machine

= $342,000 - $373,650

= -$31,650

We'll have a savings of $31,650 if model 200 is purchased rather than model 300

2. $383,000 (The Cost of existing machine). Note:  $383,000 is a sunk cost since it has already been incurred.

3. Opportunity cost is the total return of the project if the money was invested elsewhere. The Opportunity cost of investing in model 200 machine is $445,600 (Returns from the alternate project)

6 0
3 years ago
Ayayai Corp. uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $200,
Ket [755]

Answer:

Option (B) is correct.

Explanation:

Amount of which adjusting entry required:

= Amount of uncollectible accounts - Balance in Allowance for uncollectible accounts

= (Balance in accounts receivable × Estimated percentage of accounts receivable to be uncollectible) - Balance in Allowance for uncollectible accounts

= ($200,000 × 4%) - $2,000

= $8,000 - $2,000

= $6,000

Therefore, the adjusting entry is as follows:

Bad debt expense A/c      Dr.  $6,000

To Allowance for uncollectible accounts    $6,000

(To record the bad debt expense)

5 0
4 years ago
Members of Verdure pay a premium price for their gym membership and are accustomed to professional, attentive customer service.
Gennadij [26K]

Answer:

The correct answer is a. Design a descriptive protocol for each spa service including clear delivery standards.

Explanation:

A descriptive study is a type of methodology to apply to deduce a good or circumstance that is being presented; It is applied describing all its dimensions, in this case the organ or object to be studied is described. Descriptive studies focus on collecting data that describes the situation as it is.

The classic descriptive studies are case series studies and prevalence studies.

4 0
4 years ago
This method of financing government spending is frequently called printing money because high-powered money (the monetary base)
Fed [463]

Answer:

C) financing government spending through a Treasury sale of bonds that are then purchased by the Fed

Explanation:

The Fed is the only entity that can expand or contract the country's monetary base, and it does it with open market operations. In this case, the Fed is injecting money into the financial system and expanding the monetary base by purchasing treasury bonds, which is basically like my right hand lends money to my left hand, that is why it is called printing money.

4 0
4 years ago
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