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mart [117]
3 years ago
11

"DEF Corporation, after many profitable years, declares a one-time special cash dividend of $5.00 per share. After the announcem

ent, the stock is trading at $50 per share. Your customer holds 1 DEF Jan 55 Call. As of the ex date, the customer will have:"
Business
1 answer:
Tju [1.3M]3 years ago
8 0

Answer: B. 1 DEF Jan 50 Call

Explanation:

The Options Clearing Corporation (OCC) acting under its mandate of being an issuer and guarantor for options and futures contracts can alter options prices but does not do so for prices based on normal dividends as they are more regular and their effects are already accounted for in the price of the call.

When a company calls a one-time special cash dividend, this is new to the market which would not have incorporated it into the price of the call. The OCC will then adjust the price to account for this.

In this case it will do so by subtracting the dividend from the call;

= 55 - 5

= $50

The customer will then have 1 DEF Jan 50 Call .

You might be interested in
What lean concept relates to eliminating non-value-added steps and waste in product storage processes?
Effectus [21]

Answer:

Just in time (JIT) inventory management system

Explanation:

The JIT inventory management system was developed by Toyota in Japan. JIT tries to decrease production costs by lowering inventory costs and increasing efficiency by reducing wastes.

Some of the main advantages of JIT are:

  1. Productivity increase
  2. Waste elimination
  3. Higher product quality

5 0
3 years ago
Zinc, LP was formed on August 1, 20X9. When the partnership was formed, Al contributed $10,000 in cash and inventory with a FMV
antiseptic1488 [7]

Answer:

$140,000

Explanation:

The computation of the total inside basis of all the assets contributed to Zinc, LP is shown below:

= Contributed in cash + inventory tax basis + equipment adjusted basis + account receivable tax basis + land tax basis + machine tax basis

= $10,000 + $40,000 + $25,000 + $20,000 + $35,000 + $10,000

= $140,000

4 0
3 years ago
A good reason for cutting meats and poultry into thin slices for sandwiches is that
stiks02 [169]
<span>A good reason for cutting meats and poultry into thin slices for sandwiches is that thin cuts are more delicate, a sandwich produced using dainty cuts is less demanding to eat and many thin cuts make a thicker sandwich than maybe a couple thick cuts of a similar aggregate weight.</span>
7 0
3 years ago
29. Randolph is a 30 percent partner in the RD Partnership. On January 1, RD distributes $22,500 cash and inventory with a fair
yulyashka [42]

Answer: $3125 capital loss

Explanation:

Based on the information given in the question, we should note that RD Partnership distributes $22500 cash and inventory with inside basis of $28000.

Since Randolph's basis in his RD Partnership interest is $53,625, the amount and character of Randolph's gain or loss on the distribution will be:

= ($22500 + $28000) - $53625

= $50500 - $53625

= -$3125

Therefore, there's a capital loss of $3125

5 0
3 years ago
Suppose you can get an annual interest rate r (as a decimal). You want to save S dollars over N years. You will need to make a m
marissa [1.9K]

Answer:

What interest rate will she need in order to have $8,500 in 6 years?

rate 0.6% monthly

Explanation:

we want to know at which rate a monthly annuity of 95 dollars generates a future value of 8,500 in 6 years:

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 95

time 72

PV $8,500.0000

95 \times \frac{1-(1+r)^{-72} }{r} = PV\\

We solve using excel seek goal function

on A1 we write any number value

then on any other cel we write:

we define =PV(A1,6,95)

then we click data --> seek goal

we want the PV cell to match 8,500 changing A1

rate 0.005925959

4 0
4 years ago
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