Calculate the straddles profit or loss

Assignment Help Financial Management
Reference no: EM131509862

You buy a straddle on SD whose exercise price on the call and the put is $20. The premium on the call option is $0.15, and the premium on the put option is $11.00. Calculate the straddle’s profit or loss if just prior to expiration SD’s stock price is $10 per share.

a. $1.15

b. ($1.15)

c. ($11.15)

d. $11.15

e. $11.00

Reference no: EM131509862

Questions Cloud

Describe a time when you have seen these stages : While we are not working in teams for our portfolio projects, we are working in teams throughout our weekly discussions.
Identify and critically evaluate environmental factors : Identify and critically evaluate environmental factors that can affect organisational success and Identify and critically assess in a comprehensive fashion.
Explain effective approaches to the broad spectrum : Explain effective approaches to the broad spectrum of employee relations, including career development, fostering ethical behavior
Measure the effectiveness of diversity programs : Identifies & defines various tools & measurements that can be used to measure the effectiveness of diversity programs and policies established by organization.
Calculate the straddles profit or loss : Calculate the straddle’s profit or loss if just prior to expiration SD’s stock price is $10 per share.
Profitability index of project : Which of the following comes closest to the profitability index (PI) of a project that requires an initial investment of $100
How are muscles stimulated to contract : How are muscles stimulated to contract? Can you explain the difference between isometric and isotonic contraction?
What is the dollar coupon interest that will be paid in cash : What is the dollar coupon interest that will be paid in cash on the second coupon payment day?
Regulation of homeostasis : Explain two antagonist mechanisms used in the regulation of homeostasis.

Reviews

Write a Review

Financial Management Questions & Answers

  Machine is expected to generate before-tax cash savings

Tech Engineering Company is considering the purchase of a new machine to replace an existing one. The old machine was purchased 5 years ago at a cost $20,000 and it is being depreciated on a straight-line basis to a zero salvage value over a 10-year ..

  Corporate bonds-what is the current price of bond

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. If the yield to maturity is 8.0 percent, what is the current price of the bond?

  How much should they set aside monthly to afford the remodel

Tim and Denise just bought a very old house. They love the charm of it but know it will need a major remodel within the next 10 years. The plan is for the remodel to take 2 years with $10,000 being spent on electrical upgrades during year one and $10..

  The expected market rate of return is stable

Security ABC has a beta of 1.1. The expected market rate of return is stable at 8% and the risk-free rate is 4%. If the realized rate of return is 12%, the alpha of the stock is __________

  When an annuitant receives liquidation payments

When an annuitant receives liquidation payments, part of the payment is a return of principal and is thus exempt from Federal Income tax. The tax-exempt portion of the payment is calculated using the

  The building would be fully depreciated for tax purposes

The Shakey Company can finance the purchase of a new building costing $2 million with a bond issue, for which it would pay $100,000 interest per year, and then repay the $2 million at the end of the life of the building. Use AW analysis based on equi..

  What is wrong with estimate of his gross profit margin

Tony works full-time as a computer-repair technician who makes on-site repairs for individuals and small businesses. He says his gross profit margin is 94% because last year his total revenues were $100,000 and his expenses were $6,000. “I’m actually..

  What is the value of fun toys equity

Fun Toy Corporation estimates that there is 25% chance of a recession economy next year, a 50% chance of a normal economy next year, and a 25% chance of a boom economy next year. The corporation will exist until the end of next year and then it will ..

  What is the current common stock value

What is the current common stock value for each of the companies listed walt disney ,oracle corporation ford motor company. what is the current common stock value? how many shares are issued?

  What is the cost of common stock for whitewall

Whitewall Tire Co. just paid an annual dividend of $1.20 on its common shares. If Whitewall is expected to increase its annual dividend by 2.10 percent per year into the foreseeable future and the current price of Whitewall’s common shares is $15.09,..

  What is the present value of received at end of each year

An individual has $3,000 today. What will that be worth in 7 years if the going rate of interest is 4% per year? What's the present value of $250 received at the end of each year for the next 8 years if the interest rate is 4.5% per year?

  What is the future value of these investment cash flows

Trigen Corp. management will invest cash flows of $1,448,576, $490,668, $256,673, $818,400, $1,239,644, and $1,617,848 in research and development over the next six years. If the appropriate interest rate is 8.28 percent, what is the future value of ..

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