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fgiga [73]
2 years ago
7

The risk-free rate is 3%. MCD currently prices at $25. The Delta of a 1-year at-the-money European call on MCD is 0.5. John has

a portfolio made of the following: (1) One bond maturing in 1 year paying $1000. (2) Three 1-year at-the-money European MCD calls. (3) Two 1-year at-the-money European MCD puts. How many shares of MCD should John long (or short) to make his portfolio delta-neutral
Business
1 answer:
erica [24]2 years ago
5 0

Answer:

Short 1.5 shares

Explanation:

Given data :

Risk free rate = 3%

current price ( market price ) = $25

Delta of  1-year at money European call on MCD = 0.5

<u>Determine how many shares of MCD John should either Long or short to achieve a delta-neutral </u>

use the relation below

4 * 0.5  + 1 ( 0.5 - 1 )  + x = 0

x ( number of shares ) =  - [ 4 * 0.5  + 1 ( 0.5 - 1 ) ]

                                     = - 1.5 shares

negative ( - ) means MCD should short 1.5 shares

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postnew [5]

Answer:

The correct answers are:

Pantalones:

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Both

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Alicia

5 0
3 years ago
Tentacle Television Antenna Company provided the following manufacturing costs for the month of June. Direct labor cost Direct m
Temka [501]

Answer:

C. $65,800

Explanation:

Fixed csot: those which do not change for a relevant range with the production output. They aer constant.

Factory insurance                  21,000        

Factory insurance                  13,000

Factory manager's salary     10,800

Janitor's salary                        5,000

Property taxes:                 <u>      16,000  </u>

    Total Fixed Cost:             65,800

The direct materials and direct labor are variable cost as they drop to zero if no unit is produced.

Same goes with packaging cost, if no unit is produced then, no packagin is needed.

6 0
3 years ago
If Central Bank A cares only about keeping the price level stable and Central Bank B cares only about keeping output at its natu
dexar [7]

<u>A)</u><u> Both Central Bank A and Central Bank B should </u><u>increase</u><u> the </u><u>quantity</u><u> of </u><u>money.</u>

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<h3><u>What is the Central Bank?</u></h3>

A financial institution with exclusive authority over the creation and distribution of money and credit for a country or a group of countries is known as the central bank. In contemporary economies, the central bank is typically in charge of monetary policy formulation and member bank regulation. Inherently non-market-based or even anti-competitive institutions are central banks. Many central banks, despite the fact that some have been nationalized, are not part of the government and are therefore frequently hailed as being politically independent. However, even though a central bank isn't technically the government's property, its rights are still created and safeguarded by the law.

Learn more about central banks with the help of the given link:

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8 0
2 years ago
In its statement of cash flows issued for the year ending September 30, Berne Company reported a net cash inflow from operating
Dafna1 [17]

Answer:

B. $29,000

Explanation:

The cashflow from operating activities is calculated as below:

Cashflow from operating activities = Net income + Depreciation - Working capital investment

                                                          = Net income + Depreciation - (Change in inventories + Change in account receivables - Change in account payables)

Putting all the number together, we have:

123,000 = Net income + 38,000 - [(-27,000) + 31,000 - 48,000 - 12,000),

Solve the equation we get Net income = 29,000.

5 0
3 years ago
A company's net sales were $676,600, its cost of goods sold was $236,810 and its net income was $33,750. Its gross margin ratio
algol13

Answer:

13.01%

Explanation:

Gross Margin Ratio = \frac{Net Sales - Cost of Goods Sold}{Net Income}

Gross Margin Ratio = \frac{676,000 - 236,810}{33,750}

Gross Margin Ratio = \frac{439,190}{33,750}

Gross Margin Ratio = 13.01%

Gross Profit Margin is represented as (Percentage) %. Now, the Gross profit margin is really worth investigating. It not only helps when comparing Gross Profit Margin with competitors but is also helpful in investigating and comparing previous year's Gross Profit Margin. If the Gross Profit Margin fallen there could be number of reasons for this, one might be the cost of goods sold has gone up. On contrary, on the other hand the increase in Gross Profit Margin might be because of increase in selling prices.

7 0
3 years ago
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