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mariarad [96]
3 years ago
7

A stock is trading at $58. You believe there is a 70% chance the price of the stock will increase by 10% over the next 3 months.

You believe there is a 20% chance the stock will drop by 10%, and you think there is only a 10% chance of a major drop in price of 20%. At-the-money 3-month puts are available at a cost of $730 per contract. What is the expected dollar profit for a writer of a naked put at the end of 3 months?
Business
1 answer:
MAXImum [283]3 years ago
3 0

Answer: $498

Explanation:

A Put is an option that will only be exercised if the price of the underlying security which is the stock in this case, falls below the current price of $58.

This means that we will not include the 70% chance of increase in our calculation.

In a contract, there are 100 shares.

Expected profit = Contract price - (Prob. of dropping by 10% * 10% of stock) - (Prob. of dropping by 20% * 20% of stock)

= 730 - ( 20% * 10% * 58 * 100) - (10% * 20% * 58 * 100)

= 730 - 116 - 116

= $498

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Many economists attribute part of the recent increase in European unemployment to A high birthrates. B slow rates of technologic
marta [7]

Answer:

The correct answer is C) generous benefits for unemployed workers.

Explanation:

Many people in a position to work see state aid as the way to dedicate themselves to household chores, instead of working in a company. This situation has a negative impact on the unemployment indicator, making one directly believe that there is a problem in this regard, when in fact it is located elsewhere. Governments should execute actions in order to achieve a better insertion of people in the labor field, and that they also see that there is a very big difference compared to the facilities offered by the state for their maintenance.

3 0
3 years ago
"Net income for the period was $200,000. The retained earnings account had a beginning balance of $25,000. If the company paid d
solmaris [256]

Answer:

Retained earning balance at the end would be = $205,000

Explanation:

Retained earnings at the end = Retained earning at the beginning + Net income - Dividend paid

The net income would increase the balance of the retained earnings hence it is added to it.

The Dividend paid would be a cash outflow which would reduce the balance of the retained earnings, hence it is deducted from it.

So applying this to the question, we have

Retained earning balance at the end would be:

25,000 + 200,000 - 20,000 = $205,000

Retained earning balance at the end would be = $205,000

3 0
3 years ago
The First Chance Casino has gambling facilities, a bar, a restaurant, and a hotel. All employees are allowed to obtain food from
jenyasd209 [6]

Answer:

D) All of the employees may exclude the value of the meals from gross income.

Explanation:

Meals provided at the workplace (in this case the casino) by the employer are nontaxable fringe benefits. This means that the employees are not required to include them as part of their gross income.

Also, if the providing the meals benefits the employer, they can deduct 50% of the cost.

4 0
3 years ago
Required: 1-a. Calculate the future value at the end of three years. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropr
kobusy [5.1K]

Answer: $2,398.55

Explanation:

The deposit at the end of year one would have been compounded by 2 years at the end of year 3. The second year deposit would have compounded by 1 year and the third year deposit would not have compounded at all.

The future value at the end of 3 years is;

= (500 * ( 1 + 11%)²) + (750 * ( 1 + 11%)) + 950

= $2,398.55

<em>The question might not be the exact same but you can use this as a reference. </em>

6 0
3 years ago
The emphasis on keeping customers for long periods of time is the central focus of ______ value and the reason firms focus on cu
Archy [21]

Answer:

Customer Lifetime Value

Explanation:

Customer Lifetime Value is a measure of how much amount of money a customer spends on your business/products/services over the course of his whole lifetime.

It is a predictor of how well you are doing to retain your existing customers.

Why is it important?

suppose you spend $10 to advertise your product (belt) and a customer buys 5 belts on average every year for 15 years. You get $12 profit for each belt sold.

12*5*15= 900$

Subtract the advertising cost

900-10=890$ This is your customer lifetime value

Now imagine what would have happen if we had to sell these belts to 75 different customers?

The advertising cost to attract 75 customers would have been too much and hence net profit and customer lifetime value would be very less.

75*10=750$

900-750=150$

This is why customer lifetime value is important and businesses focus on retaining their customers for longer periods.

3 0
3 years ago
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