1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Rudik [331]
3 years ago
11

An American-style option with six months to maturity has a strike price of $42. The underlying stock now sells for $50. The call

premium is $14.
a. If the company unexpectedly announces it will pay its first-ever dividend four months from today, you would expect that:

1. the call price would increase.
2. the call price would decrease.
3. the call/put price would not change.
4. the put price would decrease?

b. What is the intrinsic value of the call?
c. What is the time value of the call?
Business
1 answer:
Dmitriy789 [7]3 years ago
4 0

Answer:

(a) The call price would decrease (b) $8 per share (c) $6 per share

Explanation:

Solution:

The Call option is the right to sell a specified security at a specified price on a future date.

(a) The value of call option/ price  will decrease

Since after payment of dividend, the market price of share will decrease

Hence, value of call option will decrease

(b)The Intrinsic Value = Market Price - Strike price

= $50 - $42

= $8 per share

(c)The time Value = Option Premium - Intrinsic Value

= 14-8

= $6 per share

You might be interested in
According to the most recent data available, there are approximately ____ noncustodial mothers in the united states.
kodGreya [7K]
<span>According to the most recent data available, there are approximately two million noncustodial mothers in the united states.
</span>

<span>A custodial parent is the term for a parent who has lawful and physical guardianship of their kid. There are around 13.7 million single guardians in the United States. Of these single parents, 84% of custodial guardians are moms and 16% are fathers. A non-custodial parent does not have legitimate or physical guardianship of their kids, which is typically chosen by a court. Half of non-custodial moms are thoroughly default on help, which implies they struggle or can't pay for the help their families need.</span>

3 0
3 years ago
What is the most important about the Finance Manager of an agency?
Archy [21]

Often, controllers oversee the accounting, audit, and budget departments. Treasurers and finance officers direct their organization's budgets to meet its financial goals. They oversee the investment of funds. They carry out strategies to raise capital (such as issuing stocks or bonds) to support the firm's expansion.


i hope this helps you out!!!!

3 0
3 years ago
Palin Inc., an electronics manufacturer, is headquartered in Texas. The firm shifted its operations from Texas to China due to l
Fittoniya [83]

Answer: Offshoring.

Explanation:

Palin Inc., is involved in Offshoring by taking their production operations from the U.S of America to China where they can get cheap and quality labor. Offshoring occurs when a production company changes their industry site to a new location, which posseses quality and cheaper labor than their original location.

3 0
3 years ago
You work for Emerita's Pizzeria and have been given the task of looking at company goals and deciding how the goals will be acco
Vesna [10]

The plans that must be involved are the strategic planning, the mid level, the low level, the operational planning, the top level planning.

Explanation:

In the strategic planning the company's stakeholders will ask them were they want their company to be in five years

The middle level staff will decide to focus in recruiting the new clients and to increase the productivity and they will find the way to give back to the company

Being a low level employee it is necessary that one must interact with the customers and contribute to the company's performance

In the operational planning it will be difficult to manage the customers  meet their day to day needs and satisfy them

A meeting will be held with the top level staff and hence they will be coming up with the new tools of the operational planning

3 0
3 years ago
Where should you keep your personal papers during driving your Uber shift
Savatey [412]
I would say hide it under your seat or between your seat. or your trunk
8 0
3 years ago
Other questions:
  • What is the foundation of a career strategy?
    14·2 answers
  • In recent​ years, economists have begun to use height as a measure of health​ and, indirectly, general​ well-being. Over​time, p
    6·1 answer
  • Why are rules protecting private property some of the most important rules in a free market system?
    13·2 answers
  • (L.O. 2) Nolan Company sells its product on an installment basis, earning a $450 pretax gross profit on each installment sale. F
    6·1 answer
  • Morgana Company identifies three activities in its manufacturing process: machine setups, machining, and inspections. Estimated
    9·1 answer
  • Need help asap!!!! pls
    12·1 answer
  • What is the width of the product mix?
    15·1 answer
  • VideoPlus, Inc. manufactures two types of DVD players, a deluxe model and a standard model. The deluxe model is a multi-format p
    15·1 answer
  • When a manager makes scheduling decisions, he or she is making __________,
    15·1 answer
  • Many companies in the sharing economy have successfully taken their business to foreign markets as well. What challenges do you
    15·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!