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Arisa [49]
3 years ago
14

Rosa purchased three call option contracts on ABC stock with a strike price of $27 when the option premium was quoted at $1.1. T

he option expires today when ABC stock price is $29 at the market. She pays $10 as trading costs in total. What is the net profit on this investment?
Business
1 answer:
IrinaK [193]3 years ago
8 0

Answer:

Explanation:

Profit on a long call option = max(St - X, 0) - premium paid  

Profit on a long call option = max(29 - 27, 0) - 1.1

Profit on a long call option = max(2, 0) - 1.1

Profit on a long call option = 2 - 1.1

Profit on a long call option = 0.9 per share

Total profit on the long call option = 0.9 * 100 shares per contract * 3 contracts  = 0.9 * 100 * 3  = $270

Net profit on this investment = 270 - 10

Net profit on this investment = $260

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A 10-year semi-annual coupon bond with an $1000 par value pays an annual coupon rate of 6% and the market requires 8% APR. What
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Answer:

Coupon= $30 per period.

20 period for semi annual coupon payment.

28.148% discount rate

Explanation:

1.) Coupon rate * face value of bond = coupon

semi annual rate =6%/2=3%

Coupon= 1000 *3%= $30 per period.

2.) t= number of periods = years of maturity * coupon payment semi-annual

t= 10 * 2 = 20 periods.

3. Discount rate formula =C+[(F-P)/t] / (F+P/2)

where C=coupon payment annual

F= face value of security

P=price of security= 1000 *8%=80

t= years of maturity.

so we have⇒ 60+[(1000-80)/10]/(1000+80)/2

=152/540

=28.148%

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3 years ago
Real GDP per capita Multiple Choice 1. can grow either more slowly or more rapidly than real GDP. 2. cannot grow more slowly tha
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Answer:

1) can grow either more slowly or more rapidly than real GDP.

Explanation:

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If real GDP grows at a slower rate than the population, then real GDP per capita will decrease. But if real GDP grows at a faster rate than the population, then real GDP per capita will increase.

For example, real GDP grows at 3% while population grows at 2%, real GDP per capita will grow by 1%. But some countries have positive economic growth and negative population growth, so the real GDP could grow by only 2%, but since the population growth is -1%, the real GDP per capita will grow at 3%.

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Answer:

$16,800

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