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Snowcat [4.5K]
3 years ago
15

Suppose you believe that Du Pont's stock price is going to decline from its current level of $ 83.97 sometime during the next 5

months. For $ 279.07 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $ 76 per share. If you bought a 100-share contract for $ 279.07 and Du Pont's stock price actually changed to $ 85.05 at the end of five months, your net profit (or loss) after behaving rationally on the decision to exercise the option would be ______
Business
1 answer:
djverab [1.8K]3 years ago
3 0

Answer:

Net loss $1,184.07

Explanation:

Calculation for the Net profit/loss

Using this formula

Net profit/Loss =Share contract amount-[Numbers of shares*(Price per shares-Changed in stock price)]

Let plug in the formula

Net profit/loss=$279.07-[100*($76-$85.05)]

Net profit/loss=$279.07-(100*$-9.05)

Net loss=-$279.07- $905)

Net loss=-$1,184.07

Therefore the net profit (or loss) after behaving rationally on the decision to exercise the option would be $1,184.07

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mars1129 [50]

Answer and Explanation:

The subject of the email is too long and contains all the information. The subject should have been: Proposal draft due on Friday. Rest of the information should have been included in the body of the email.

8 0
3 years ago
Java jane's first coffeehouse was very successful due to the unique flavors, on-site baked goods, and inviting ambiance. the own
alexdok [17]
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7 0
3 years ago
The XYZ Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest EPS was $18.00,
stellarik [79]

Answer:

current intrinsic value per stock = $26.35

Explanation:

year                      dividend              EPS

0                              0                       $18

1                               0                       $20.88

2                              0                       $24.22

3                              0                       $28.10

4                              0                       $32.59

5                              0                       $37.81

6                              $12.59              $41.97

growth rate up to year 5 = 16%

ROE growth rate starting year 6 = 11%

dividend growth rate starting year 6 = 11% x (1 - 30%) = 7.7%

cost of equity = 24%

horizon value at year 5 = $12.59 / (24% - 7.7%) = $77.24

current intrinsic value per stock = $77.24 / 1.24%⁵ = $26.35

4 0
3 years ago
A small publishing company is planning to publish a new book. The production costs will include one-time fixed costs (such as ed
patriot [66]

The number of books that will be produced such that the costs from the two methods be the same is 4668 units.

From the complete question, the total cost of the first equation will be:

= 8.25x + 65054

The total cost for the second equation will be:

= 19.50x + 12539

Then, we'll equate both equations together and this will be:

8.25x + 65054 = 19.50x + 12539

Collect like terms

19.50x - 8.25x = 65054 - 12539

11.25x = 52515

Divide both side by 11.25

11.25x/11.25 = 52515/11.25

x = 4668 units.

Therefore, the breakeven unit will be 4668 units.

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5 0
3 years ago
Read 2 more answers
Cindy's apartment complex is offering renters insurance through their insurance company. The insurance company charges an annual
Alex787 [66]

Answer:

$836.08 per month

Explanation:

In order to calculate Cindy's new monthly rent, we would simply need to divide the renter's insurance by 12 since there are 12 months in a year. and then add that product to her monthly rent like so...

565.00 / 12 = 47.08

789 + 47.08 = 836.08

Finally, we can see that Cindy's new rent after including the renters insurance would be $836.08 per month

6 0
3 years ago
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