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Musya8 [376]
3 years ago
5

A trader buys a call option with a strike price of $30 for $3. Does the trader ever exercise the option and lose money on the tr

ade. Explain.
Business
1 answer:
stepladder [879]3 years ago
3 0

Answer:

The trader exercises the option and loses money on the trade if the stock price is between $30 and $33 at option maturity.  

Explanation:

A call option is the right to buy an asset at an agreed price on the maturity date. This agreed price is known as the strike price.

In the given scenario, the strike price is $30. The trader pays an additional $3 for the right to exercise the option, thus paying a total of $33 for the option.

Now, if the asset price on maturity date is greater than $30, the trader shall exercise the option and buy the asset. This is because the market price of the asset is greater than the price the trader pays for it, resulting in a favorable situation for the trader.

However, the trader paid a total of $33 for the stock. Hence, the trader shall lose money on the trade as long as the asset price is below $33.

Therefore,  if the asset price upon maturity is between $30 and $33, the trader shall exercise the option but lose money on the trade.

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The life span of a record that follows a set of phases from creation to final disposition is called the ___________.
polet [3.4K]

Answer:

The correct answer is: records and information life cycle.

Explanation:

The records and information life-cycle management is a practice that implies a set of steps to store and dispose of information. The approach comprehends the creation of the piece of information, processing, distribution, organization, storage, and eventual disposition.

3 0
3 years ago
Robert and rosie both invested $7,500 four years ago. they both earned a 15% return, however robert earned a simple return of 15
timurjin [86]
The difference between simple and compound interest is significant because the interest is higher when using compounding. Robert's investment amounted to $12,000 after 4 years while Rosie's investment after 4 years totaled to $13,117.55 with a difference of $1,117.55.

Thus, Rosie will have $1,117.55 more than Robert.
8 0
3 years ago
On July 1 the FISHER Shoe Store paid 15,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the
spin [16.1K]

Answer and Explanation:

The adjusting entry is as followS:

Rent expense $2,500

      To Prepaid rent $2,500

(Being rent expense is recorded)

Here the rent expense is debited as it increased the expenses and credited the prepaid rent as it decreased the assets

The rent for one month is

= $15,000 ÷ 6 months × 1 month

= $2,500

7 0
2 years ago
View each of the below-listed provisions that are often contained in bond indentures alone. Which of these provisions would tend
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The answer would be
7 0
2 years ago
An employee earns $28 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. If the employee worked 55 h
Gemiola [76]

Answer: Gross pay- $1750.00

Net pay - $1,215.75

Explanation: Gross pay = Nomal time =$28*40= $1,120. Overtime = $28*1.5*15= $630 Total= $1,750

Net pay = $1,750 less Security tax, Medicare tax, federal income tax withheld.

$1750* 6.0%= $105

$1750* 1.5% = $26.25

Tax withheld= $403

Net pay= $1,750-$105-$26.25-$403

= $1,215.75

8 0
3 years ago
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