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g100num [7]
4 years ago
7

A customer buys 1 XYZ Dec 30 call at 7 and sells 1 XYZ Dec 40 call at 1. Two months later, if the customer closes the positions

when the spread is trading at 9 points, the customer has
Business
1 answer:
nadezda [96]4 years ago
3 0

Answer:

Gain of $300

Explanation:

Based on the information given the investor have a debit spread and Since the investor  paid a net premium of the amount of $600 which is calculated as : (7 − 1) in which the spread had widened  to 9  which means the  investor will have a  profit or gain of the amount of  $300 calculated as :(9 − 6) due to the spread .  

Therefore the customer has a gain of the amount of $300 reason been that it is a Debit spreads  and secondly Debit spread are often profitable.

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Problem 16-12 Calculating WACC [LO1] Blitz Industries has a debt-equity ratio of 1.5. Its WACC is 7.7 percent, and its cost of d
nignag [31]

Answer:

a) 13.18%

b) 9.06%

c-1) 14.55%

c.2) 11.805%

c.3) 9.06%

Explanation:

debt = 60%, cost of debt = 5.4% x 0.75 = 4.05%

equity = 40%, Re = ?

WACC = 7.7%

7.7% = (40% x Re) + (60% x 4.05%)

7.7% = (40% x Re) + 2.43%

(40% x Re) = 5.27%

Re = 5.27% / 40% = 13.175 = 13.18%

13.18% = ReU + (ReU - 0.054) x 1.5 x (1 - 25%)

13.18% = ReU + (ReU - 0.054) x 1.125

0.1318 = ReU + 1.125Reu - 0.06075

0.19255 = 2.125ReU

ReU = 0.19255 / 2.125 = 9.06%

ReL = 9.06% + (9.06% - 5.4%) x 2 x 0.75

ReL = 14.55%

ReL = 9.06% + (9.06% - 5.4%) x 1 x 0.75

ReL = 11.805%

6 0
4 years ago
Yooo Rate my friend 1/10
MAXImum [283]

Answer:

1/10

Explanation:

Not right?

8 0
3 years ago
Suppose the interest rate is 3.8 %. a. Having $ 500 today is equivalent to having what amount in one​ year? b. Having $ 500 in o
Sliva [168]

Answer:

a. $519

b. $481.69

c. $500 Today

Explanation:

a. Computation of amount in one year

= $500 × 1.038

= $519

for computing the 1.038 (1 + 1.038)

b. Computation of amount of today

= $500 ÷ 1.038

= $481.69

c. $500 today

No, because today I have money and it will not depend on when I need the money. I can earn interest and invest the amount till the time I need the money actually.

4 0
3 years ago
In my last job, I led complex negotiations that dealt with the cost, size, and/or scope of the deal. True or false
kherson [118]

Probably seems true....

8 0
3 years ago
Product life cycle is defined as
dezoksy [38]

Answer:

The correct answer is option d.

Explanation:

The product life cycle can be defined as a concept in marketing that describes the stages a product goes through in the marketplace. It is used by management and marketing professionals to decide when to increase advertising, reduce prices, expand to new markets, or redesign packaging.

This concept can be broken down into four stages:

  • Introduction
  • Growth
  • Maturity
  • Decline

8 0
4 years ago
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