Call option considering that this is a NAKED call

Assignment Help Financial Management
Reference no: EM13970909

We have 10,000 common shares of Procter and Gamble, each of which we bought for $38. The premium is $1.5, and the strike price is $45 per share. Expound on the results, in two different cases. In the first case, the market price rises to $60, and in the second case it falls to $38. Compute the rate of return for both the seller and the buyer of the P&G call option considering that this is a NAKED call.

Reference no: EM13970909

Questions Cloud

How do the program goals align with millennium health goals : Post a comprehensive summary of the both programs and briefly answer the following questions: Briefly describe the programs you chose and the health problem/s the program/s addresses. How do the program's goals align with the Millennium Health Goals
The expected return for the general market : The expected return for the general market is 13.0% and the risk premium in the market is 8.9%. Tasaco, LMB, and Exxos have betas of 0.849, 0.681, and 0.581 respectively. What are the appropriate expected rates of return for the three securities?
How might you work to resolve the conflict : How might you work to resolve the conflict? Is a resolution to this situation possible to all interested parties? (This includes the three coworkers, management, and you.) Discuss.
Call option considering that this is a NAKED call : We have 10,000 common shares of Procter and Gamble, each of which we bought for $38. The premium is $1.5, and the strike price is $45 per share. Expound on the results, in two different cases. In the first case, the market price rises to $60, and in ..
About the spot exchange rate : Suppose 1 year ago, Miller Company had inventory in Britain valued at 1.5 million Swiss Francs. The exchange rate for dollars to Francs was 1 Franc = 1.15 dollars. Today, the exchange rate is one Swiss franc equals 1.06 U.S. dollars. What is the U.S...
Discuss with your supervisor the administration style : Write your response as if your talking directly with the supervisor of the program in the link above. Discuss with your supervisor the administration, funding streams, and management style used within the agency
How should vivian and melvin record these transactions : As of December 31, year 2, Melvin still has not transferred title to the building, although it received title to the boat. How should Vivian and Melvin record these transactions?
What is the target cost : a. What is the target cost? By how much will Pizza Pies need to cut costs in order to achieve the target cost? b. Identify places in the Pizza Pies Limited value chain where possible savings could be achieved to meet the target cost.

Reviews

Write a Review

Financial Management Questions & Answers

  About the annual net patient revenues

Community Hospital has annual net patient revenues of $150 million. At the present time, payments received by the hospital are not deposited for six days on average. The hospital is exploring a lock-box arrangement will promises to cut the six days t..

  Debt will be used to repurchase shares of outstanding stock

U-Meyer and Associates, an online options broker, is an all equity firm with 60,000 shares of stock outstanding at a market price of $50 a share. The company has earnings before interest and taxes of $87,000. U-Meyer and Associates has decided to iss..

  Calculate the expected return and variance of your portfolio

You have three assets X, Y and Z with expected returns of 10%, 15% and 20%, respectively. The weights of the first two assets are 50% and 70% respectively. Calculate the expected return and the variance of your portfolio

  Calculate the actual dollar amount the first econ bank

Two weeks ago, you signed an employment contract and accepted the responsibility of a Branch Manager with the First Econ Bank in Arlington, TX. On your first day of job, at the close of the business day (May 2nd, 2015) after a closer examination of t..

  Prepare the statement of comprehensive income

Prepare the statement of comprehensive income and changes in equity

  Debit should have gone to utilities expense

A transaction was recorded as a debit to phone expense and a credit to cash. After reviewing the trial balance and searching, we find that the debit should have gone to utilities expense.

  What is the present value of this lottery prize

You just won a very special kind of lottery. Instead of receiving a large lump sum now, for tax reasons this lottery makes equal yearly payments of $ 5,760 for the rest of your life! The only catch is that you have to wait 2 years for the first payme..

  What is the maximum sustainable growth rate

Bunge Corp. is expected to maintain the same payout ratio in the future as in the current year (problem #7), and the expected return on new investments for Bunge is 10%. What is the maximum sustainable growth rate for Bunge’s dividends in the long ru..

  What is the profitability index for each project

The Matterhorn Corporation is trying to choose between the following two mutually exclusive design projects: Year Cash Flow (I) Cash Flow (II) 0 –$87,000 –$55,000 1 36,900 11,700 2 47,000 34,500 3 27,000 28,500. If the required return is 10 percent, ..

  Inventory system believes that inventory models

A manager of an inventory system believes that inventory models are important decisionmaking aids. Even though often using an EOQ policy, the manager never considered a backorder model because of the assumption that backorders were bad and should be ..

  Explain risks compensated for in bond yields

Explain risks compensated for in bond yields.

  Part a - performance objectivereport and monitor

part a - performance objectivereport and monitor expenditure and compare with financial plans so that recommendations

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