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Effectus [21]
3 years ago
9

You hold short positions of a stock and believe the price of the stock is going to decline within the next three months. However

, you realize the stock price could increase and want to hedge that risk. Which one of the following option positions should you take to create the desired hedge? A) Buy a call B) Sell a call C) Buy a put D) Sell a put E) No option position will create the desired hedge
Business
1 answer:
Allisa [31]3 years ago
4 0

Answer: A) Buy a call

Explanation:

A Call Option is a derivative instrument where a person buys the option to be able to buy an asset at a set price. The call option therefore makes a profit if the price of the asset increases past the set (exercise ) price as the holder of the call option will be able to buy the asset for lower than it's market value.

If you believe that the price is likely to increase then you should buy a call option so that if it does increase, you can make a profit from the call option that would offset your loss from the short positions.

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One problem in the interstate trucking industry is the number of trucks that return empty after making a delivery. There is a we
balu736 [363]

Answer:

Yield management pricing

Explanation:

Yield management pricing is the charging of different prices for a given set of capacity at a specific time in order to maximize revenue. This is based on the demand and supply in the market and is very common in industries such as airlines, hotels and resorts. When there is very high demand for airline seats, prices for them are high. However, if some of those passengers decided to refund their tickets, close to departure and the flight would be taking off soon, instead of flying with empty seats and no revenue from them, the airline would decide to sell these same seats at a cheaper rate in order to gain some revenue. This is a form of revenue maximization.

6 0
3 years ago
You manage an equity fund with an expected risk premium of 12.4% and a standard deviation of 38%. The rate on Treasury bills is
timama [110]
  • The expected return = = 12.84 %.
  • The standard deviation = 22.8 %.

<u>Explanation</u>:

On the client's portfolio (total investment = 120 K + 80 K = 200 K,  

  • The expected return

                    = (12.4 %risk premium + 5.4 %risk free return) \times (120 K / 200 K) + 5.4 % \times (80 K / 200 K)

                    = 17.8 % \times 0.6 + 5.4 % \times 0.4

                    = 12.84 %.

  • The standard deviation would be = 38 % \times 0.6 + 0% \times 0.4

                                                                  = 22.8 %.

4 0
3 years ago
What percentage of federal tax revenue comes out of individuals paychecks?
Karolina [17]

Answer:

OPTION C = 51%

Explanation:

<em>Percentage of federal tax revenue which comes out of individuals paycheck</em>

<em>=individual income tax+corporate income tax</em>

given that,

individual income tax=42%

corporate income tax=9%

Hence, Percentage of federal tax revenue which comes out of individuals paycheck

=42%+9%

=51%

6 0
4 years ago
Read 2 more answers
Abc and mno both have the same market price and shares outstanding for their common stock. if abc's price-to-earnings ratio is h
mr_godi [17]

If ABC's price-to-earnings ratio is higher, that would indicate ABC's net income is less than MNOs.

If ABC's price-to-earnings ratio (MV per share / EPS)

Is higher than MNOs, then its earnings (defined as net income ÷ shares outstanding) are lower than MNOs.

The information provided does not provide enough detail to know whether ABC or MNO had higher sales.

Net income refers to the amount a character or commercial enterprise makes after deducting fees, allowances, and taxes. In trade, internet earnings are what the business has left over in spite of everything prices, inclusive of salary and wages, price of products or uncooked substances,s and taxes.

In enterprise and accounting, internet profits is an entity's profits minus the price of products bought, costs, depreciation and amortization, interest, and taxes for an accounting duration.

Gross pay is what personnel earn earlier than taxes, advantages, and different payroll deductions are withheld from their wages. The amount remaining after all withholdings are accounted for is net income or take-home pay.

Learn more about net income here brainly.com/question/15530787

#SPJ4

8 0
2 years ago
​(Annuity payments) Calvin Johnson has a 5000 debt balance on his Visa card that charges 12.9 percent APR compounded monthly. In
olya-2409 [2.1K]

Answer:

41.49 approx 42 months

Explanation:

To calculate the number of months, we use the formula for loan

p = r(pv) / 1 - (1+r)-n

make n subject of the formula

p ( 1 - ( 1+r) ^-n) = r(pv)

p - p (1+r)^-n = r(pv)

p (1+r)^-n = p-r(pv)

(1+r)^-n = (p-r(pv)) / p

( 1+r)^n = p / (p-r(pv))

n In( 1+r) = In (p / (p-r(pv))

n = In ( p/ ( p - r(pv)) / In ( 1 +r)

n is the number of months, p is the payment per months

pv is the present value of 5000

substitute the values given into the equation

n = (In ( 150 / (150 - ( 0.129 / 12 × 5000)) / ( In ( 1 + ( 0.129 / 12) = 41.49 approx 42 months

8 0
3 years ago
Read 2 more answers
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