1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
DiKsa [7]
3 years ago
5

The market price of Northern Mills stock has been relatively volatile and you think this volatility will continue for a couple m

ore months. Thus, you decide to purchase a two-month European call option on this stock with a strike price of $30 and an option price of $1.60. You also purchase a two-month European put option on the stock with a strike price of $30 and an option price of $.20. Contracts are on 100 shares. What will be your net profit or loss on these option positions if the stock price is $36 on the day the options expire
Business
1 answer:
Ronch [10]3 years ago
4 0

Answer:

$420

Explanation:

Calculation to determine What will be your net profit or loss

First step is to calculate Net Profit from call option Using this formula

Net Profit from call option = (Gain from Exercising Call Option - Option Premium paid) * Size of the Contract

Let plug in the formula

Net Profit from call option= (($36 - $30) - $1.60) × 100 Shares

Net Profit from call option= $440

Second step is to calculate Net Loss from put option

Using this formula

Net Loss from put option = (Option Premium paid) * Size of the Contract

Let plug in the formula

Net Loss from put option = $0.20 × 100 Share

Net Loss from put option = $20

Now let calculate the net profit using this formula

Net profit= Net Profit from Call Option - Net loss from Put Option

Let plug in the formula

Net profit= $440 - $20

Net profit= $420

Therefore What will be your net profit is $420

You might be interested in
What are the points of difference, or unique attributes, for gopro products?
erastovalidia [21]
GoPro product is a digital camera with a wide lens that has the capability of take photos. The GoPro brand products are used in sports.
Point of Difference or POD refers to the unique properties of a product. The POD of GoPro products are the unique attributes of these products. Some of these are:
1. Durability of the product
2. Easy to use
3. Quality of camera

5 0
3 years ago
Chevron signs​ $73b gas deal ​Gorgon, Chevron's huge liquefied natural gas​ project, is finally going forward. The​ company, alo
vaieri [72.5K]

Answer:

Australia - <em>Shift​ Australia's production function​ upward, create a movement up along the production function as the​ full-employment quantity of labor​ increases, and increase potential GDP</em>

United States - <em>Will not change potential GDP as production happens in Australia</em>

Explanation:

Australia's production potential will rise which will be depicted by a shift upwards in the Production Possibilities Frontier (PPF) thereby leading to an increase in the full employment quality of labor and potential GDP for Australia.

As the production is happening in Australia, it will not affect potential GDP in the US.

3 0
4 years ago
Using Examples from developing countries explain the term unemployment and discuss five ways of addressing unemployment problem
Pachacha [2.7K]

Answer:

Unemployment is measured by the unemployment rate, which is the number of people who are unemployed as a percentage of the labour force (the total number of people employed added to those unemployed).[4]

Unemployment can have many sources, such as the following:

new technologies and inventions

the status of the economy, which can be influenced by a recession

competition caused by globalization and international trade

policies of the government

regulation and market

Unemployment and the status of the economy can be influenced by a country through, for example, fiscal policy. Furthermore, the monetary authority of a country, such as the central bank, can influence the availability and cost for money through its monetary policy.

In addition to theories of unemployment, a few categorisations of unemployment are used for more precisely modelling the effects of unemployment within the economic system. Some of the main types of unemployment include structural unemployment, frictional unemployment, cyclical unemployment, involuntary unemployment and classical unemployment. Structural unemployment focuses on foundational problems in the economy and inefficiencies inherent in labor markets, including a mismatch between the supply and demand of laborers with necessary skill sets. Structural arguments emphasize causes and solutions related to disruptive technologies and globalization. Discussions of frictional unemployment focus on voluntary decisions to work based on individuals' valuation of their own work and how that compares to current wage rates added to the time and effort required to find a job. Causes and solutions for frictional unemployment often address job entry threshold and wage rates.

8 0
2 years ago
Specify and explain the typical shapes of the marginal-benefit and marginal-cost curves. How are these curves used to determine
Zarrin [17]

Answer:

The completely accurate definition of the particular subject is outlined in the following subsection including its clarification.

Explanation:

  • The marginal profit trajectory has so far been sloping down, MB decreases, and since most of a commodity is collected as much more quantities of something like a good offer fewer sense of achievement, unlike earlier versions. This same marginal cost of production is pointing down upward, becomes rising as more than just a commodity is generated as additional items need progressively inappropriate utilization of resources.
  • The optimum amount of something like a given substance exists whenever MB is equivalent to MC. If MC reaches MB everything should still be made available fewer resources. In any other context, the services are more useful.
5 0
3 years ago
The Electrotech Corporation manufactures two industrial-sized electrical devices: generators and alternators. Both of these prod
jasenka [17]

Answer:

Generator = G and Alternator = A

Maximize 250G + 150A

2G + 3A = 260

G + 2A = 140

Explanation:

5 0
3 years ago
Other questions:
  • Record the adjusting entry for salaries payable (LO3-3) Fighting Irish Incorporated pays its employees $3,220 every two weeks ($
    8·1 answer
  • What’s the purpose of balancing or monitoring your checking account? A, B,C or D
    13·1 answer
  • What's the difference between a tax and a tariff? A. Taxes are charged on income while tariffs are charged on sales. B. Taxes ar
    15·2 answers
  • New Body, a gym, bought new exercise equipment on credit. The purchase price was $10,438.88. They secure the loan with a financi
    9·1 answer
  • During a recession (downturn) in the economy firms lay off workers and the unemployment rate rises. During these times we can ex
    7·1 answer
  • Since the beginning of the twentieth century, the United States has experienced _________ recessions. Of those, ______ have occu
    11·1 answer
  • If a defendant makes an untrue statement of fact about the plaintiff and the statement was intentionally or accidentally publish
    6·1 answer
  • An employee makes $120,000 per year and saves 7% of his/her salary in the company's 401-K plan. The company matches 4% of the sa
    6·1 answer
  • At the end of the year, Sheffield Co. has pretax financial income of $616,000. Included in the $616,000 is $78,400 interest inco
    11·1 answer
  • Costs that have been incurred and cannot be eliminated regardless of the alternative chosen are ________. multiple choice sunk c
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!