Calculate the break-even amount

Assignment Help Finance Basics
Reference no: EM133068137

Anna bought an option contract on Telstra shares with an exercise price of $60 and an expiry date in one month. The market price for Telstra shares today is $57.21. The call price is trading at $0.25.

-Calculate the break-even amount for the call position and draw a fully labelled diagram for both buyer of the option and seller of the option.

-At what minimum share price will the option buyer exercise the option on the expiration date? Provide reasoning in your answer.

Reference no: EM133068137

Questions Cloud

Generate credits and debits in the australian balance : Using the double-entry accounting system, show how the following transactions will generate credits and debits in the Australian Balance of Payments (BoP) accou
Forward price of a contract deliverable : The two-month interest rates in Switzerland and the United States are 2% and 4% per annum with continuous compounding, respectively. The spot price of one Swiss
How long did it take to settle the loan : Shane had to make payments of $1,125 every 6 months to settle a $17,000 loan that he received at 4.22%. How long did it take to settle the loan
Explain the knowledge conversion processes : Explain the Knowledge conversion processes highlighted by Nonaka Takeuchi Model of Knowledge management. Which of these conversions are difficult and why?
Calculate the break-even amount : Anna bought an option contract on Telstra shares with an exercise price of $60 and an expiry date in one month. The market price for Telstra shares today is $57
What macrs depreciation method must mark use : In 2020 Mark's business use was 65%. However, in 2021 Mark's business use dropped to 45%. What MACRS depreciation method must Mark use in 2021
Determine the maximum project production cost : Based on the General Land Use Plan designation for the site and the assumptions referenced above, analyze the alternative uses which could be considered on the
Calculate the current value of the bonds : Calculate the current value of the bonds of Maua Ltd, using futureshare price increases of: (i) 4% per year (ii) 6% per year.
How many units must be produced : Blue Book printing is budgeting sales of 25,000 units and already has 5,000 units in beginning inventory. How many units must be produced

Reviews

Write a Review

Finance Basics Questions & Answers

  Stocks equity characteristics and valuation

Express Surgery Center's (ESC) preferred stock, which has a par value equal to $110 per share, pays an annual dividend equal to 9% of the par value. If investors require a 15% return to purchase ESC's preferred stock, what is the stock's market va..

  What proportion of rings will have inside diameters

the finished inside diameter of a piston ring is normally distributed with a mean of 10 centimeters and a standard

  What role does diversity play in managing change what are

5.1deep-level abilities are closely related to job performance. as a manager how could you use the knowledge that

  What is chicago avenue bank asset portfolioduration

What is Chicago Avenue Bank's asset portfolioduration?

  What is the relative benefit of buying as opposed to leasing

You are considering whether to buy or lease a car. If you lease, you have to pay a refundable security deposit of $5 hundred, and a monthly lease payment.

  Compute how the tax affects the price paid by consumers

Use a general equilibrium framework to discuss the possible incidence of a tax on cigarettes.

  What is the value of a put option written on the stock

What is the value of a put option written on the stock with the same strike price and expiration date as the call option?

  How you can test the empirical validity of the capm

Explain, and in details, how you can test the empirical validity of the Capital asset Pricing Model. In addition, comment on what determines the value.

  What is the bond pv

What is the bond's PV? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

  What is a tax free merger

What is a tax-free merger?

  What must municipals offer for the investor

An investor is in a 30% tax bracket. If corporate bonds offer 8% yields, what must municipals offer for the investor to prefer them to corporate bonds -  Find the equivalent taxable yield of a short-term municipal bond currently offering yields of..

  Calculate the project net investment

About a year ago, Johnson paid $10,000 to a consulting firm to conduct a feasibility study of the new milling machine. Johnson's marginal tax rate is 40 percent.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd