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Yakvenalex [24]
3 years ago
8

You construct a bear spread by selling a 6-month put option with a $25 strike price for $2.50 and buying a 6-month put option wi

th a $29 strike price for $4.50. Compute the spread profit (including the cost) when the stock price in 6 months becomes (a) $23, (b) $26, and (c) $33.
Business
1 answer:
torisob [31]3 years ago
8 0

Answer:

a) 0

b) -1

c) -4

Explanation:

Bear spread:

Short P1 = 2.5, X1 = 25

Long P2 = 4.5, X2 = 29

Payoff at expiration = 25-29 + Max (0, 29-ST) - Max (0, 25-ST)

                                = Max (0,29-ST) - Max (0,25-ST) - 4

a) ST = 23

Spread profit = 6 - 2 -4 = 0

b) ST = 26

Spread profit = 3 - 4 = -1

c) ST = 33

Spread profit = -4

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The following monthly data pertains to the Amnesty Company: Sales commissions 8,000 Delivery truck depreciation $2,500 Direct la
Fed [463]

Answer: $46000

Explanation:

The manufacturing overhead for the month will be calculated as:

Indirect labour = $15000

Add: Indirect material = $4000

Add: Factory electricity gas = $8000

Add: Factory supervisor salary = $12000

Add: Depreciation on factory building = $7000

Therefore, the total manufacturing overheads would be gotten by adding the above values together whihc will be equal to $46000.

3 0
3 years ago
Suppose The government decides to increase taxes by 40 billion in order to increase social security benefits by the same amount
Marina86 [1]

Answer:

Suppose the government decides to increase taxes by $40 billion in order to increase Social Security benefits by the same amount. If the MPC is 0.9, will aggregate demand increase, decrease or remain unchanged at current prices with this combined tax transfer policy? No change Increase in AD O Decrease in AD

5 0
3 years ago
Grey Wolf, Inc has current assets of $2,090 net fixed assets of $9,830 current liabilities of $1710 and long-termdebt of $4520.
s2008m [1.1K]

Answer:

(a) $5,690

(b) $380

Explanation:

Given that,

current assets = $2,090

Net fixed assets = $9,830

Current liabilities = $1710

Long-term debt = $4520

Total assets:

= Current assets + Net fixed assets

= $2,090 + $9,830

= $11,920

Total Liabilities:

= Current Liabilities + Long-term Debt

= $1710 + $4520

= $6,230

(a) Total assets = Total liabilities + Stockholder's equity

$11,920 = $6,230 + Stockholder's equity

$11,920 - $6,230 = Stockholder's equity

$5,690 = Stockholder's equity

(b) Net working capital:

= Current assets - Current liabilities

= $2,090 - $1,710

= $380

8 0
3 years ago
Explain, using examples, the abuse of monopoly power as a market failure.
saw5 [17]

Answer:

Explanation:

A monopoly is a market structure where there is only one supplier of a product and many buyers. An example of a monopoly is Microsoft; it is a price setter in the market. Abuse of monopoly power can occur when a firm dominates the market meaning no competitors within the industry. This abuse   could be in form of limiting output or setting higher prices to benefit from supernormal profits . This therefore leads to less choice for consumers.Over time, monopolies can become less innovative because they do not have competition and causing the market to fail and be inefficient; the price mechanism fails to take into account all of the costs and/or benefits of providing and consuming a good.

3 0
4 years ago
A partner had the following items reported on a partnership Schedule K-1: Ordinary income $27,000 Interest income 4,500 Dividend
AnnZ [28]

Answer:

right answer is option no b

Explanation:

₹32,500

6 0
3 years ago
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