Draw a payoff diagram showing the value

Assignment Help Finance Basics
Reference no: EM132842764

You have shorted a put option on Ford stock with a strike price of ?$13. When you sold? (wrote) the? put, you received ?$2. The option will expire in exactly six? months' time.

a. If the stock is trading at ?$11 in six? months, what will your payoff? be? What will your profit? be?

b. If the stock is trading at ?$24 in six? months, what will your payoff? be? What will your profit? be?

c. Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.

d. Redo? c, but instead of showing? payoffs, show profits.

Reference no: EM132842764

Questions Cloud

What were the estimated direct labor-hours : If the predetermined overhead rate is based on direct labor-hours, what were the estimated direct labor-hours at the beginning of the year
Draw a payoff diagram showing the value : You own a put option on Ford stock with a strike price of ?$8. When you bought the? put, its cost to you was ?$4. The option will expire in exactly six? months'
Evaluate the knowledge and skills acquired over your tenure : Discuss at least three ways in which the portfolio development process has helped you to synthesize and evaluate the knowledge and skills acquired over your.
How did the attempted impeachment of president clinton : How did the attempted impeachment of President Clinton come about? What do you think about this attempt at impeachment and the surrounding controversies
Draw a payoff diagram showing the value : Draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.
Determine the speculator profit the euro appreciates : 1- The current spot exchange rate is $1.20/£ and the three-month forward rate is $1.18/£. Based on your research, you expect the exchange rate to be $1.19/£ in
How you have grown in the areas of educational theory : Analyze how you have grown in the areas of educational theory, design, and analysis throughout your time in the M.Ed. program.
Assess the effect of the gag rule on abolitionist movement : Analyze how the women's rights movement would gain momentum from the antislavery movement. Assess the effect of the Gag Rule on Abolitionist Movement.
What is the value added cost : A competitor keeps 10 days of inventory on hand the competitor's carrying costs average $1,000 per day. What is the value added cost

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the conversion value and ratio

A convertible bond has a face value of $1,000 and the conversion price is $35 per share. The stock is selling at $30 per share. The bond pays $75 per year.

  What is the dollar amount of borrowed funds

1) You enter into a margin transaction with a 50% margin requirement and $30 share price for 1,000 shares.

  What was effect of repurchases on per-share price of stock

Stock Repurchases and Value: Dell, Inc. (Easy) During fiscal year 2011, Dell repurchased 57 million shares on the market for $800 million.

  What price are you willing to pay per share

If you think the rate of return on the preferred stock should be 7.1%, what price are you willing to pay per share?

  What are the different instruments of money market

What are the different instruments of money market available in Pakistan?

  Qualitative and quantitative measurements

What qualitative and quantitative measurements is the company actively using as a foundation for marketing?

  Recreation in hennepin county-mn

What are the recreation options, fees or free, are they accessible to all? Check city and chamber of commerce sites.

  Define business process reengineering

Describe and define business process reengineering and continuous improvement programs. How are they different?

  Success and effectiveness of implemented whs training

Explain 2 strategies to evaluate the success and effectiveness of implemented WHS training. Explain your view.

  Calculate the value of the debt

Assume your ?rm has 20 shares of equity, a 10-year zero- coupon debt with a maturity value of $200 and warrants for 8 shares with a strike price of $25. Calculate the value of the debt, the share price, and the price of the warrant.

  How much do you need to invest today

How much do you have to invest (today) to get the Surface in 2 years? If your parents are happy to subsidize $500 (today), how much do you need to invest today?

  Calculate project net present value

1. Use the Homework Student Workbook to calculate each project's net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI).

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