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damaskus [11]
3 years ago
6

Options can also be used for hedging. Consider an investor who in May of a particular year owns 1,000 Microsoft shares. The shar

e price is $28 per share. The investor is concerned about a possible share price decline in the next two months and wants protection. The investor could buy 10 July put option contracts on Microsoft on the CBOE with a strike price of $27.50. This would give the investor the right to sell a total of 1,000 shares for a price of $27.50 each. If the quoted option price per share is $1, what is the total cost of the hedging
Business
1 answer:
Sunny_sXe [5.5K]3 years ago
8 0

Answer:

The total cost of hedging is $1,000

Explanation:

The Investor in may owns 1000 Microsoft shares which is currently selling for $28  per shares and he is on the opinion that the price will crash in next two months so need to be protected from the crash

So he should buy put option which gives him right to sell at strike price ($27.5) what ever the price may be . So for buying the right to sell, he need to pay premium the option writer

Given premium per share is 1, We have 1000 shares, so we need hedge for 1000 shares .

Cost of hedging = No of option contracts bought * Premium per option

Cost of hedging = 1000 * $1

Cost of hedging = $1000

Thus, the total cost of hedging is $1,000.

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You just received a $5,000 gift from your grandmother which you have decided to save and then gift to your grandchildren 50 year
svetlana [45]

Answer: Difference = $185,948.5 - $147,285. = $38,663.5

Explanation:

To calculate the future value,  you have to use the formula

fv = PA (1 + r/100)ⁿ

where

FV = future value

PA = Present Amount

r = rate

n = number of years

calculating for the future value if you earn a percent of 7.5 =

fv = 5,000 (1 + 0.075) ⁵⁰

fv = 5,000 ( 1.075)⁵⁰

fv = 5,000 (37.1897)

fv = 185,948.5  

calculating the Fv when the rate is 7%

fv = 5,000 (1 + 0.070) ⁵⁰

fv = 5,000 ( 1.070)⁵⁰

fv = 5,000 (29.4570)

fv = 147,285

Then find the difference between the Fv when the rate is 7.5 and when the rate is 7

Therefore difference = $185,948.5 - $147,285. = $38,663.5

6 0
4 years ago
The steps a company can take toward enhancing corporate ethics include
anygoal [31]
<span>The steps a company can take toward enhancing corporate ethics include developing and enforcing ethics codes. These ethics codes are determined by the respective organization to indicate and show the employees what manners and behavior to exhibit in the place of work.</span>
4 0
4 years ago
Is using special hand tools to avoid the point of operation an acceptable
SIZIF [17.4K]

Only in certain cases using special hand tools should avoid the point of operation an acceptable  substitute for guards on a machine.

Only in certain cases

<u>Explanation:</u>

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Laborers ought to have the option to perceive the perils related to the unique. Wrenches must not be utilized when jaws are sprung to the point that slippage instruments should be outfitted with security gatekeepers to ensure laborers.

8 0
4 years ago
Read 2 more answers
On June 30, 2019, bonds were issued at par with a face value of $2,000,000 and a 7% stated interest rate. Each bond has a $1,000
vagabundo [1.1K]

Answer:

The answer is "$84,000 in the numerator and 60,000 in the denominator".

Explanation:

If securities are transformed into stocks. So, the common stack holder  should be have a larger net revenue, calculation of net revenue

= \$ 2,000,000 \times 7 \% \times (1 - 0.40) \\\\=  \$ 2,000,000 \times \frac{7}{100} \times 0.6\\\\=  \$ 20,000 \times 7 \times \frac{6}{10}\\\\=  \$ 2,000\times 7\times 6\\\\=  \$ 2,000 \times 42\\\\=  \$ 84,000\\

In addition, the loads will also raise the total amount of shares which is calculated as follows:

= \frac{\$ 2,000,000}{ \$ 1,000 \times 30}\\\\= \$ 60,000  \ stocks

Formula:

\ EPS =\frac{\ net \ income}{ \ average \ number \ of \ stocks}

That's why in this question numerator is = $ 84, 000 and denominator = $ 60,000

7 0
3 years ago
eborah, a lawyer for a minor-league hockey team, is negotiating a contract between the team and its new practice stadium. The co
Marizza181 [45]

Answer:

Add an integration clause to the contract.

Explanation:

7 0
3 years ago
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