Answer:
On the ex date, the contracts will show as:
10 ABC Jan 60 Calls
The customer must exercise call contracts to buy the stock prior to the Ex-Date
Explanation:
The reason is that if the customer is not exercising the call contracts then it will not be able to receive the stock dividend. Furthermore, the OCC doesn't adjust the contract because of the dividend announcement prior to exercise of contract. This means it will only adjust if the contract is exercised.
The settlement of the exercise takes around 2 business working days, hence the customer must exercise the option 2 days earlier to the ex-date.
Answer:
I would think about what I could use to get my audiences attention and something that would be interesting for everyone so that everyone can learn something.
Explanation:
Answer:
Dr Bond investment $50,000
Cr cash $50,000
Dr cash $1,250
Cr interest revenue $1,250
Dr cash $50,000
cr bond investment $50,000
Explanation:
On July 1 2019,Red company would have parted with cash of $50,000 which means that cash account should be credited with $50,000 while bond investment account is debited with same amount
On receipt of first interest payment of $1,250 (5%*$50,000*1/2) cash is debited with $1,250 while interest revenue is credited with the same amount.
Upon receipt of face value at redemption,the journal entry would be opposite of the initial one