Answer:
48
Explanation:
N(d2): probability of call option being exercised
So current stock price = 100
K strike price = 100
r risk free rate = 0% = 0.05
s: standard deviation = 20%
t: time to maturity = 3month = 0.25 year
di – In(So/K) + (r +0.5 * 5%) ** S*t0.5
d1 = 0.05
d2 = dl - 5*10.5
d2 = -0.05
N(d2) = normsdist(d2) = 0.48
Pay-off per option = 1
No. of options sold = 100
Expected pay-off = -0.48*1*100 = -48
Therefore go long on 48 shares so that if stock price becomes 101, pay-off from stocks = 48*(101-100) = 48
Answer:
The correct answer is letter "A": Shareholders who are risk averse may prefer some dividends over the promise of future capital gains.
Explanation:
A dividend is a cash distribution by a company to its shareholders out of the profits of a period. Capital Gain refers to the increase in the value of a capital asset or an investment upon sale. From the two of them, dividends are safer investments since they do not rely exclusively on the sales of an asset.
Thus, a conservative investor is likely to choose dividends over the promise of capital gains.
A related party transaction
Give this a heart if that helps
Answer:
George’s holding period return is 16%.
Explanation:
holding period return = (End value-Beginning value + Dividends)/Beginning value
= (54 - 47.5 + 1.1)/47.5
= 16%
Therefore, George’s holding period return is 16%.
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