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ratelena [41]
3 years ago
15

The premium on a put option on the market index with an exercise price of 1050 is $9.30 when originally purchased. At expiration

of 2 months the position is closed, and the index spot price is 1072. What is the Put Payoff?
Business
1 answer:
lianna [129]3 years ago
5 0

Answer:

The put payoff = $1,072 - $1,050 = $22  per share

Explanation:

The put payoff is simply the difference between the spot price and the exercise price.

To determine the real profit obtained in this transaction we would need to know the investor's return rate. One of the basic pillars in finance it that $1 today is worth more than $1 tomorrow. We need a return rate to adjust the premium paid, for example if the return rate = 6%, then the premium would have been $9.30 x (1 + 6%/12)² = $9.30 x 1.005² = $9.39

profit = number of shares x (put payoff - adjusted premium)

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Great Eastern Rectangle (GER) currently has 970,000 shares of stock outstanding that sell for $29.25 per share. Assuming no mark
Nina [5.8K]

Answer:

Please see attachment

Explanation:

Please see attachment

3 0
3 years ago
Suppose the price of a substitute to lcd televisions rises. What effect will this have on the market equilibrium for lcd​ tvs? T
Artyom0805 [142]

Answer: The equilibrium price of lcd tvs will

a. Increase and the equilibrium quantity will increase.

When the price of a substitute of lcd tvs rise, the demand for lcd tvs will rise, since they become cheaper than the substitute.

This will cause the existing demand curve to shift outwards, resulting in a rise in quantity.

As a result of the outward shift, the quantity supplied will also rise and so will the equilibrium price.

5 0
3 years ago
ou are planning to save for retirement over the next 30 years. To do this, you will invest $890 per month in a stock account and
Romashka [77]

Answer:

Monthly withdraw= $23,294.99

Explanation:

Giving the following information:

Stock:

Monthly deposit= $890

Number of periods= 30*12= 360

Interest rate= 0.109 / 12= 0.0091

Bond:

Monthly deposit= $490

Number of periods= 30*12= 360

Interest rate= 0.069 / 12= 0.00575

<u>First, we need to calculate the amount of money collected at the moment of retirement. We need to use the following formula on each investment:</u>

<u />

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit

Stock:

FV= {890*[(1.0091^360) - 1]} / 0.0091

FV= $2,452,918.1

Bond:

FV= {490*[(1.00575^360) - 1]} / 0.00575

FV= $586,123.47

Total FV= 2,452,918.1 + 586,123.47

Total FV= $3,039,041.57

<u>Now, the monthly withdrawal for 25 years:</u>

<u />

Number of periods= 25*12= 300

Interest rate= 0.079 / 12= 0.0066

Monthly withdraw= (FV*i) / [1 - (1+i)^(-n)]

Monthly withdraw= (3,039,041.57*0.0066) / [1 - (1.0066^-300)]

Monthly withdraw= $23,294.99

7 0
2 years ago
if the company chooses the lease option, it will have to pay an immediate deposit of 25000 to cover any future damages to the eq
Likurg_2 [28]

Answer:

The answer is "68,788".

Explanation:

Net cash flow present value = immediate deposit + Annual lease payment present value

= 25000+(18000\times 2.991)-25000\times 0.402

Net cash flow present value = 78838-10050 = 68788

8 0
3 years ago
How does financial manager involes operating decision<br>​
daser333 [38]

Answer:

they use financial statements and other information prepared by accountants to make financial decision and are focused on the cash flows, the inflows and outflows of cash.

Explanation:

7 0
2 years ago
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