Determine jason profits

Assignment Help Finance Basics
Reference no: EM133110360

Part A) Jason bought a put option on a $100,000 Treasury bond with an exercise price of $105,000 for a premium of $2,000. If on expiration the Treasury bond sells for $110,000, determine Jason´s profits and explain if he will exercise the right to sell the Treasury bond. How would your answer change if the Treasury bond sells for $95,000 on expiration?

Part B) Refer to the previous exercise. Determine Jason´s profits (for both prices on expiration date) if instead of buying a put option on a $100,000 Treasury bond, he sold a $100,000 Treasury bonds futures contract at par.

Reference no: EM133110360

Questions Cloud

Determine the payback period of the project : Net cash inflows from the project are expected to be $177,500 annually. Determine the payback period of the project, assuming that cash flows occur evenly
Multinational corporations capital structure : What are the various factors that affect an multinational corporations capital structure? Please explain thoroughly.
Overall objective of a ceo of a firm : How do the models of value of time, the interest rates and the Fisher Effect affect the overall objective of a CEO of a firm?
Calculate the new price of the bond : Calculate the price return of the bond and the income of the bond (using original YTM)
Determine jason profits : Part B) Refer to the previous exercise. Determine Jason´s profits (for both prices on expiration date) if instead of buying a put option on a $100,000 Treasury
What are transaction accounts : What are transaction accounts? What is their cost to the bank? How do they compare with other liabilities in terms of being a source of funds?
What is the cash flow to stockholders for the year : The Outlet showed $227 in the common stock account and $2,977 in the additional paid-in surplus account. What is the cash flow to stockholders for the year
Determine the premium if the net profit equals : Suppose you buy a call option on a $100,000 Treasury bond contract with an exercise price of $105,000. If the price of the Treasury bond is $115,000 at expirati
Evaluate five levels of managerial skills : Evaluate five levels of managerial skills that increase manager effectiveness. Review the "Five Levels of Organization Hierarchy" Choose two skills from level

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain price of the 5-zero coupon bond

Assuming that the expectations hypothesis is correct, what will the price of the 5-zero coupon bond be when it has 1 year left to maturity.

  Evaluate how you would handle stressful situations

Evaluate how you would handle stressful situations, manage change, and stay motivated.

  What amount of interest expense was paid in cash

Harveys Corporation borrowed $60,000 from the bank on November 1, 2014. What amount of interest expense was paid in cash in 2014

  Appropriate risk and uncertainty assessments

A life-cycle cost (LCC) analysis is being used to help determine whether the purchase of a high-performance heating ventilating and air conditioning

  Find the maximum percent of stock

Nelson purchased 1,300 shares of stock for $12.75 a share. The initial margin requirement is 70% and the maintenance margin is 40%.

  Is cognitive dissonance ever good for an organization

Is cognitive dissonance ever good for an organization? For an individual? What are three specific things that a leader can do to minimize the impact/leverage

  How investment decisions are influenced by expected future

Assess how investment decisions are influenced by expected future interest rate movements, indicating any confounding factors by investor habits.

  Northern pacific heating and cooling inc has a 6-month

northern pacific heating and cooling inc. has a 6-month backlog of orders for its patented solar heating system. to

  Describe how is the npv rule is related to a cost-benefit

Discuss the Net Present Value (NPV) decision rule. Describe how is the NPV rule is related to a cost-benefit analysis, and how is it related to the Valuation Principle.

  Sandra deposits 2750 in an account paying 9 apr compounded

sandra deposits 2750 in an account paying 9 apr compounded every 3 months. if she makes no payments or withdrawals for

  Evaluate this offer and recommend whether or not

One-year interest rates are 5%.  A stock currently sells for $40 and will either rise to $50 or fall to $35 in six months.  Using the binomial option pricing model, determine the fair value of a $45 call.

  What factors could affect your answer

Assume investors require a return of 10 percent on IBM stock. Is the stock priced correctly? What factors could affect your answer?

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