1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
GREYUIT [131]
3 years ago
11

Assume you just purchased 100 shares of Apple stocks at $300. You are worrying that the competition from other tablet PC and sma

rt phone producers will have a negative impact on Apple stock prices in 1 month. Generally speaking, you are still quite bullish on Apple stock. In order to hedge against this downside risk, you establish a protective put position by buying a put option contract with around 1-month maturity on Apple stock. However, the premium of the put option with strike price at $300 is $12, which is quite expensive. If you feel purchasing the put option with strike price at $300 and $12 premium is too expensive, what else can we do to reduce the cost of protective put position
Business
1 answer:
Dmitry_Shevchenko [17]3 years ago
4 0

Answer:

If you believe that the premium is too expensive, then you should try to purchase another put option with a lower strike price. This will probably reduce your potential profits, but it will also decrease the amount of money that you will pay for the put options. For example, a put option with a strike price of $290 might be worth $5.

You might be interested in
Fully explain the differences between the following, using examples: a. Trade-offs and Opportunity Cost b. Normative and Positiv
Natali [406]

Answer: See explanation

Explanation:

a. . Trade-offs and Opportunity Cost.

A trade-off occurs when an increase in a particular thing brings about a reduction in another thing. It involves reducing a particular resource in order to increase another resource.

Opportunity cost is the loss on a potential gain when one chooses something else.

b. Normative and Positive Economics

Normative economics is when the focus of a particular economy is about fairness and what should be right. It is based on the judgement of individuals or their opinions.

Positive statement is a statement that's backed by facts. It is a statement that's said to be true.

c. Consumer Goods and Capital Goods

Consumer goods are the goods that are consumed by individuals in order to satisfy their current wants.

Capital goods are the goods that are used to produce other goods. They are not wanted for immediate consumption but rather used for production process.

d. Resource Markets and Product Markets

A resource market is referred to as a market where a particular business can buy the resources that it need for its production process.

A product market is the market where goods are traded. In such market, one can buy goods like cars, fans, etc

e. Free Market, Mixed and Centrally-Planned

Free market is a market whereby the individuals and the firms are the one controlling the resources in such market. Prices are determined in such market based on the interaction that occurs between the demand and supply. There's minimal intervention from the government in such market.

Command economy can also be called a planned economy and it is the economy whereby the allocation off goods and the services for that economy is down by the government.

Mixed economy is an economy whereby all the economic agents like the individual, the firms and government all play a role in the production and also the distribution of goods and services.

8 0
2 years ago
C&a+sold+30%+of+the+5000+items+that+it+carried+last+week. +there+were+500+items+for+which+some+demand+was+not+satisfied. +wh
Hunter-Best [27]

Answer:

.............

Explanation:

..................

6 0
2 years ago
The ____ of a corporation can be defined as a set of values, beliefs, goals, norms, and ways to solve problems shared by members
Dovator [93]

Answer:

The correct word for the blank space is: corporate culture.

Explanation:

Corporate culture represents the values, norms, and objectives a company has and that have been obtained and changed during its years of operations. The corporate culture is complemented by its ethical culture that rules the employees' individual behavior in the work frame and as a result of the interaction among other workers.

8 0
3 years ago
Describe how having a financial plan will help you earn and save money while moving forward with academic and career goals.
Andru [333]

Answer:

having a financial plan means finding a job and preparing to use half of your income or money earned from that job and save the other half , doing this every time you are a looking to get paid will increase your savings and then you would be able to use that savings for furthering your education so you can get access to study jobs that will help you to understand the career you wish to pursue

4 0
2 years ago
Company A has a beta of 0.70, while Company B's beta is 1.20. The required return on the stock market is 11.00%, and the risk-fr
nikdorinn [45]

Answer:

e) 3.38%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Required rate of return  = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

For A

= 4.25% + 0.70 × (11.00% - 4.25%)

= 4.25% + 0.70 × 6.75%

= 4.25% + 4.725%

= 8.975%

For B

= 4.25% + 1.20 × (11.00% - 4.25%)

= 4.25% + 1.20× 6.75%

= 4.25% + 8.1%

= 12.35%

So, the difference would be

=  12.35% - 8.975%

= 3.375%

The (Market rate of return - Risk-free rate of return)  is also known as market risk premium

7 0
3 years ago
Other questions:
  • Harvest master, a maker of farm equipment based in nebraska, is planning to send a u.s. marketing manager to lead a product laun
    10·1 answer
  • QUICKEST AND BEST ANSWER GETS A FOLLOW AND BRAINLIEST
    15·1 answer
  • According to O*NET, what are common skills needed by Hotel, Motel, and Resort Desk Clerks? Check all that apply.
    5·3 answers
  • Fiwrt Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales Fiwrt (in units) for the next three mon
    11·1 answer
  • Exercise 21-15 Direct materials and direct labor variances LO P2 The following information describes production activities of Me
    6·2 answers
  • Which course of action would the WTO take if member A tries to impose a trade barrier against member B?
    12·2 answers
  • J&J Enterprises wants to issue eighty 20-year, $1,000 zero-coupon bonds. If each bond is to yield 8%, how much will J&J
    5·1 answer
  • On June 1, $40,000 of treasury bonds were purchased between interest dates. The broker commission was $600. The bonds pay intere
    8·1 answer
  • Help plz
    7·2 answers
  • The exact indifference curves of different investors:_______
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!