Answer:
The answer is D. I, II, and III
Explanation:
As an investor buy a puts, he has the right to sell at exercised price stipulated in the put contract, which hedge the investor from the risk that the price in 6-month time will be going below the exercised price ( because he is able to sell the stock at exercised price through put option he holds). So, I is correct.
II. is correct because be writing a calls the investor has the obligation to sell at exercised price, given the market price fall below the exercised price in 6-month time, the call will not be exercise; however, he will be compensate by the premium from writing a call.
III. is correct because a short call will include holding the underlying asset, thus; once the major stock price decline happens, the profit from the strategy will be deducted due to decrease in underlying'asset price. Thus, in this situation, hedging with puts is probably better.
Answer:
The correct answer is C) Potential for high growh and dividend payments
Explanation:
When you purchase a stock of a company, you do it because you expect the company to grow and have good financial results. If the company has a good financial statement at the end of the year, it will pay you a dividend, which is the proportion of the company's profits in relation to the number of shares that you possess.
For example, if company ABC earned a $1,000,000 profit in 2019, and you own 1% of shares, the dividend that you would recieve is : $1,000,000 x 1% = $10,000
Answer:
Holding period return is 5.14%
Explanation:
Return received during the holding period of timeof an investment is holding period return. It includes the Income received and Price variance of initial and current.
Holding Period Return = ( Selling Price - Purchase price )/( Purchase price x Initial Margin )
Holding Period Return = ($64.60 - $62.20)/($62.20 x 0.75)
Holding Period Retur = 0.0514
Holding Period Retur = 5.14 %
Answer:
Variable
Explanation:
Given that, Variable is defined as a mathematical term that is often time used in business operation as well, to describe a form of value or cost that is not stable or permanent, which can change over a given period of time.
Hence, in this situation, the correct answer is " a VARIABLE is a measure, such as a price or quantity, that can take on different values at different times.
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