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3 years ago

An investor has sold 1 ABC Jan 50 Call and has bought 1 ABC Apr 60 Call. This is a:________.

Business

1 answer:

Kitty [74]3 years ago

5 0

Answer:

diagonal spread

Explanation:

Spread is basically a sale and purchase of a call. So here the the types of spreads determine the relationship between the strike price and the expiration dates of all options involved in the trade.

In this example investor has sold 1 ABC Jan 50 Call and has bought 1 ABC Apr 60 Call. This means he bought the option ABC with the longer expiration date and with a higher strike price and sold the option ABC with the near expiration date and the lower strike price. Here both the expiration and strike price are different. So this is an example of diagonal spread.

The option horizontal spread is incorrect because it is a spread that depicts the difference in expiration dates but strike price is the same. Here both the expiration and strike price are different.

The option straddle is incorrect because it is a spread in which both options have the same expiry date and same strike price. Here both the expiration and strike price are different.

The option dialogue spread is not a valid option too.

The option Combination is also suitable because this is an example of Combination and combinations include option spread trades such as vertical spreads, horizontal spreads, and diagonal spreads.

So the most suitable option is diagonal spread which is an example of Combination.

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On September 30, 2018, Corso Steel acquired a patent from Thermo Steel. The agreement specified that Corso will pay Thermo $1,00

Delicious77 [7]

Answer:

$17,146

Explanation:

Given:

Acquisition cost of patent = $2,000,000. $1,000,000 is paid immediately. Remaining $1,000,000 is paid after 2 years on September 30, 2020.

We have to calculate present value of $1,000,000 @8%, 2 years. Present value factor is 0.8573.

Present value of $1,000,000 = 1,000,000×0.8573 = $857,300.

Calculation of interest expense:

Principal amount = $857,300

Rate = 0.08

Time period = $\frac{3}{12}$ = $\frac{1}{4}$ \

Interest expense = $857,300\times 0.08\times \frac{1}{4}$

= $17,146

Therefore, interest expense to be recorded as on December 31, 2018 is $17,146

5 0

3 years ago

At what amount is a short-term notes receivable recorded on the issue date?

laiz [17]

Answer:

At face value

Explanation:

Short term notes are always recorded at face value, and that applies to both interest and non-interest bearing short term notes.

Non-interest bearing long term notes must be recorded at their discounted value, i.e. you must discount the long term note' face value by the discount rate used by the company.

6 0

3 years ago

Task 2: Record the listed transactions of Nikea Inc. for the first quarter (January to March) in

gavmur [86]

Answer and Explanation:

The journal entries are shown below:

a. Cash Dr $20,000

To Capital $20,000

(being the issuance of the capital stock is recorded)

b. Rent Dr $5,000

To cash $5,000

(being the rent paid is recorded)

c. Supplies dr $1,500

To Account payable $1,500

(being the supplies purchased on account is recorded)

d. Account payable Dr $1,000

To cash $1,000

(being the amount paid is recorded)

e. Cash Dr $25,000

To sales commission $25,000

(being the sales commission earned is recorded)

f. Automobile expense $4,500

To Cash $4,500

(being cash paid is recorded)

g. Office salaries Dr $8,000

To cash $8,000

(being cash paid is recorded)

h Supplies expense $1,500

To supplies $1,500

(being supplies expense is recorded)

g. Dividend payable $1,500

To Cash $1,500

(being dividend paid is recorded)

3 0

3 years ago

If a utility company were considering an increase in electricity or gas prices in order to cover the costs of a capital investme

Firlakuza [10]

Question:

If an utility company were considering an increase in electricity or gas prices in order to cover the costs of a capital investment, this sector would result in the smallest change in quantity demanded in the long run and thus higher profits. True or false?

Answer:

The answer is True.

Explanation:

Change in the demand for gasoline and or electricity is primarily set by the number of industrial or bulk users.

Scarce goods are allocated though the help of prices. It is important to note that demand for gasoline or electricity is more elastic in the long term, so small changes in price will alter supply and demand in either direction in the shortrun.

The demand for gas or electricity are by nature inelastic. This means that when prices go up, demand goes down but not by much.

It means that in the short term, the individuals cannot alter their lifestyle immediately to adjust for the hike in prices.

To adjust they would have to probably purchase new devices which or cars which consume less gas or electricity.

The effect this has for the company on the overall is that they are able to achieve their aim of recouping their capital investments from the planned increase in price.

Cheers!

8 0

3 years ago

Mauve company permits employees to occasionally use the copying machine for personal purposes. the copying machine is located in

serg [7]

That means they arnt paying you a lot or there not making more that there selling

6 0

3 years ago