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nordsb [41]
3 years ago
9

Calculate the elasticity of a call option with a premium of $6.50 and a strike price of $61. The call has a hedge ratio of 0.7,

and the underlying stock’s price is currently $47.

Business
1 answer:
Svetach [21]3 years ago
6 0

Answer:

The Elasticity of the call option = \mathbf{ 5.06 \%}

Explanation:

From the given information:

For $1 change in stock price

the percentage  of change in stock price = ΔS/S

ΔS/S = (1× 100)/47 = 2.127659574

ΔC = hedge ratio × ΔS

ΔC = 0.7 × 1

ΔC = 0.7

However , the percentage change in the stock call option price = ΔC/C

= (0.7 × 100) / 6.50

= 70/6.50

= 10.76923077

∴

The Elasticity of the call option = \mathbf{\dfrac{percentage \ change \  in \ the \stock \  call \ option \ price }{percentage \ change \ in \ the \ stock \ price}}

The Elasticity of the call option = \mathbf{ \dfrac{10.76923077 }{2.127659574}}

The Elasticity of the call option = \mathbf{ 5.06 \%}

       OR

The Price Elasticity of the call option can be computed by using EXCEL FUNCTION(=B3*(B4/B1))

The illustration to that can be seen in the diagram attached below.

The Elasticity of the call option  \simeq 5.06% by using EXCEL FUNCTION.

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Oliga [24]

Answer:

$1,565

Explanation:

Enter the following inputs into financial calculator, we will have:

n = 3 years

Present value (PV): The amount that you should pay for the annuity. This is the missing value we need to calculate

Future value (FV): FV = 0, there is no future value of an annuity

PMT: The amount that annuity pays per year. ($850)

i/r = 5.5%: The interest you expect to receive from the annuity

PV = $1,484

Since the payment is made at the beginning of each year, you should multiply the PV amount by  (1+0.055)

The final answer would be 1,484 x 1.055 = $1,565

The most you should pay is $1,565

7 0
3 years ago
Choices companies give customers of the
gizmo_the_mogwai [7]
<h2>Choices companies give customers of the features to be included on the products they purchase are known as "options".</h2>

Explanation:

Options are nothing but an enhanced version of the basic product.

There are 'n' number of examples which can be given and I am listing few.

Example 1: Shampoo

Shampoo is the basic product, adding on to it with little conditioner effect and fragrance enhance the existing model and customer likes the enhanced feature / option.

Example 2: Automobile products

A basic automobile with rear mirror, seat cover, carpets, etc to attract customer.

Example 3: Mobile phones

Almost all the customers look mainly for the features and they get attracted towards the purchase only by reading the features.

Features are added to keep the product live in the market.

7 0
2 years ago
Dell Computers wants to reach all potential users of their products, both industrial buyers and final consumers. They would most
Vera_Pavlovna [14]

Answer:

The correct answer is letter "B": national.

Explanation:

National advertising refers to a marketing strategy in which a company aims to offer a good or service in the same proportion all over a country. This advertising is massive and involves promoting the corporation's product through different mediums of communications such as <em>television, radio, newspapers, </em>or <em>billboards</em>. The campaign is directed to individual consumers and organizations.

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Is the capacity to have inventory present when and where it is desired by a customer?
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Product Availability is the capacity to have inventory present when and where it is desired by a customer.

<h3>What is product availability?</h3>

Product availability is the ability of a store to meet customer demand for a specific item. Retailers may provide thorough information on product availability to help customers with planning and decision-making.

Consistent product availability is essential to the success of your retail business because it provides the framework for your merchandising and draws in your target audience by providing them with the necessities to meet their needs.

Thus, it is product availability.

For more details about Product Availability, click here:

brainly.com/question/13736137

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4 0
1 year ago
A manufacturing company that produces a single product has provided the following data concerning its most recent month of opera
ZanzabumX [31]

Answer:

$71,240

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The computation of the total gross margin under absorption costing is shown below:

As we know that

Gross Margin = Sales - Variable Manufacturing Cost - Fixed Manufacturing Overhead For Units Sold

Sales (2,740 units × $131) $358,940

Less Manufacturing Costs  

Direct Materials (2,740 units × $44) $120,560

Direct Labor (2,740 units × $19) $52,060

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Gross Margin                         $71,240

We simply applied the above formula

6 0
3 years ago
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