Answer:
Detailed step wise solution is given below:
Answer:
The value of the time premium between the August and October options is $0.50
Explanation:
A time premium or time value is the amount by which the price of a stock option exceeds its intrinsic value.
To calculate the time premium between August and October we will Subtract October extrinsic value - August extrinsic value
Time premium = 6.25 - 5.75 = $0.50
Answer:
The shareholders equity=-$156, this means that the liabilities outweigh the assets by $156.
Explanation:
The shareholder's equity can be defined as the net value of a company. It basically is the amount that shareholders would receive if all the company's assets were liquidated and all of the company's debt also paid back. The shareholder's equity is usually found on the company's balance sheet and can be used as a financial measure to determine the company's financial status. The shareholder's equity is determined from subtracting the company's totals liabilities from its total assets. This can be expressed in the formula below;
E=A-L....equation 1
where;
E=shareholder's equity
A=total assets
L=total liabilities
The total assets represents everything that has some economic value to the company. A liability is an obligation to something or anything of economic value that the company owes. In our case, the company has an obligation to pay it's creditors $6,460 at the end of they year. This is a liability.
Use equation 1 above to solve;
E=unknown, to be determined
A=$6,304
L=$6,460
replacing;
E=(6,304-6,460)=-$156
The shareholders equity=-$156, this means that the liabilities outweigh the assets by $156.
