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
gayaneshka [121]
2 years ago
8

Laura has an equity portfolio valued at $11.2 million that has a beta of 1.32. She has decided to hedge this portfolio using SPX

call option contracts. The S&P 500 index is currently 1402 with a $100 multiplier. The call option delta is .582. What is the appropriate strategy for Laura to effectively hedge her portfolio? What is the appropriate strategy for Laura if she decides to use put contracts on the same index with the same expiration?
Business
1 answer:
Nonamiya [84]2 years ago
6 0

Answer:

Explanation:

Put Delta = call delta - 1 = 0.582 - 1 = -0.418

No of Options = (-11.2 million / (-0.418 × 1402)) × 1.32 = 25,227 options

No of Contracts = 25,227 / 100 = 252 contracts

You might be interested in
On January 1, Graves Corporation had 60,000 shares of no-par common stock issued and outstanding. The stock has a stated value o
Zina [86]

Answer:

Date        Account Titles and Explanation     Debit          Credit

June 15   Cash Dividends                              $103,500

               [(60000+9000)*$1.5]

                        Dividends payable                                     $103,500

                (Being dividend declared for 69000 shares at $1.5 each)

July 10     Dividends payable                        $103,500

                         Cash                                                          $103,500

                (Being dividend paid)

Dec 15      Cash Dividends                             $116,800

                [(60000+9000+4000)*1.6]

                          Dividends payable                                   $116,800

                (Being dividend declared for 73000 shares at $1.6 each)

6 0
2 years ago
Sweet night :) sleep tight​
Softa [21]

Answer:

good night

Explanation:

sweet dreams :)

3 0
2 years ago
Zytel Corporation produces cleaning compounds and solutions for industrial and household use. While most of its products are pro
SCORPION-xisa [38]

Answer:

4,513 approx.

Explanation:

The computation of the minimum number of jars of silver polish is shown below:-

Sales revenue for one jar of silver polish    $5.60

Sales revenue for 1/4 pound of Grit 337     0.85

($3.40 ×  1 ÷ 4)

Incremental revenue from

further processing                                        $4.75

($5.60 - 0.85)

Incremental costs of further processing:

Processing costs                      $2.40

Selling costs                              $0.40          $2.80

Incremental contribution

margin from further

processing into silver polish

per jar                                                            $1.95

($4.75 - $2.80)

Point of indifference denotes the point where all options are equally profitable. But after that we will see that more processing is profitable. This is due to the fixed costs involved in further production.

Thus Minimum number of jars needed to produce to justify the further processing = Avoidable Fixed cost ÷ Incremental contribution

= $8,800 ÷ $1.95

= 4,513 approx.

8 0
2 years ago
Which type of account typically has low liquidity? AMoney Market Account BCertificate of Deposit (CD) CChecking Account DSavings
natta225 [31]
Likely B. Liquidity is basically the measurement of how quickly a given investment can be turned into cash. If you can sell it or take money from it quickly, it is liquid. Any one of the others (A, C or D) can be withdrawn from in a short time, and thus are very liquid. CDs, however, are set to a specified amount of time. You deposit money for, say, 5 years and then are allowed to withdraw it, not before. Thus, it is not liquid.
8 0
3 years ago
Daniel and Melissa just bought a new house for $200,000. Each quarter, they now have to pay $4,000 in taxes. Which type of tax a
Cerrena [4.2K]
Real estate property
4 0
2 years ago
Read 2 more answers
Other questions:
  • HElP PLEEEASE!!
    15·2 answers
  • What are two main reasons for having a savings account
    15·2 answers
  • In a command economy, which group is most responsible for producing the
    15·1 answer
  • Which property of addition is used for (3+7)+6=3+(7+6)
    13·2 answers
  • On January 1, 2021, Red Flash Photography had the following balances: Cash, $19,000; Supplies, $8,700; Land, $67,000; Deferred R
    5·1 answer
  • Kendrick's job responsibilities have recently been changed as part of a decentralization effort taking place at his office. He h
    5·1 answer
  • Demand for earbuds is represented by: P = 402 – 2Q The costs are $8 per set of earbuds. In order to stock earbuds, other items w
    6·1 answer
  • At the end of April, Cavy Company had completed Job 766 and 765. According to the individual job cost sheets the information is
    9·1 answer
  • Many people have argued that the skills needed to be successful in today's workforce have changed. What skills do you feel an in
    10·1 answer
  • in an international setting, day-to-day decisions about labor relations are usually handled by each foreign subsidiary
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!