A newspaper advertisement for Cashmere Closet states "This Saturday 9 a.m., 1 Red Cashmere Scarf, worth $299.95… $10.00 First Co
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Answer:
correct option is $38.21
Explanation:
given data
stock price = $100
stock price = either $160 or $60
interest rate = 6%
exercise price = $135
solution
we get here Hedge ratio that is express as
Hedge ratio = (Pay off in case price appreciates - Pay off in case price depreciates) ÷ (Appreciated price - Depreciated price) ..................1
put here value we get
Hedge ratio = ( Max [$135 - $160, $0] - Max[$135 - $60, $0]) ÷ ($160 - $60)
Hedge ratio =
Hedge ratio = - 0.75
so here Price of Put option is
Price of Put option = -Hedge ratio × {Appreciated price ÷ (1 + risk free rate) - Present stock price}
Price of Put option = -(-0.75) ×
Price of Put option = $38.21
so here correct option is $38.21
Answer:
$ 40
Explanation:
Given :
Bid price = $ 50
Ask price = $ 50.2
Ideal price =
= $ 50.1
This is the ideal price of the stock that is based on the mid point price.
The transactional cost for the buy is = Ask price - ideal price
= 50.2 - 50.1
= $ 0.1
Thus we have to give $ 0.1 as the transactional cost if we want tot buy the stock immediately, so that we buy it more than the ideal price.
Therefore, the transactional cost for the sales is = ideal cost - bid cost
= $ 50.1 - $ 50
= $ 0.1
Thus we have to pay $ 0.1 as the transactional cost if we want to sell the stock now, so as to sell it cheaper than the ideal price.
We known the quantity = 200
So the round up transactional cost =
= 200 x (0.1 +0.1)
= $ 40