How much total profit will you earn on these purchases

Assignment Help Financial Management

Reference no: EM131343354

Today, you are buying a one-year call on Piper Sons stock with a strike price of $27.50 per share and a one-year risk-free asset which pays 3.5 percent interest. The cost of the call is $1.40 per share and the amount invested in the risk-free asset is $26.57. How much total profit will you earn on these purchases if the stock has a market price of $29 one year from now?

Reference no: EM131343354

Questions Cloud

Beatrice markets is expecting a period of intense growth : Beatrice Markets is expecting a period of intense growth and has decided to retain more of its earnings to help finance that growth. As a result, it is going to reduce its annual dividend by 30 percent a year for the next 2 years. After that, it will..

Determine the percent yield : Determine the percent yield(with respect to CO2 and CH4) of the reaction if 1.25g of CO2 was formed by reacting 2.50g of CH4(g) with excess O2 in the reaction: CH4(G) +O2(g) ---->CO2(g) +H2O(g).

What is the intrinsic value per share : Last week, you purchased a call option on Edgewater stock with a strike price of $40. The stock price was $39.80 and the option price was $0.45 at that time. What is the intrinsic value per share if the stock is currently priced at $39.10?

What is the net profit or loss on this investment : You purchased six call option contracts on ABC stock with a strike price of $32.50 when the option was quoted at $1.80. The option expires today when the value of ABC stock is $34.60. Ignoring trading costs and taxes, what is the net profit or loss o..

How much total profit will you earn on these purchases : Today, you are buying a one-year call on Piper Sons stock with a strike price of $27.50 per share and a one-year risk-free asset which pays 3.5 percent interest. The cost of the call is $1.40 per share and the amount invested in the risk-free asset i..

Calculate the pressure : Using the following data, calculate the pressure of 100.0mol of CO(g) in a 40.0L container at 25 degrees Celcius using both the ideal gas equation and the real gas equation. Why are these two values so different? (aCO=147.2L2kPa mol-2; bCO=0.0395L..

Identify the individual strengths and level of development : Identify the individual's strengths and level of development. Explain the leadership style and interventions that would be most appropriate to help this individual achieve his or her identified goals, skills, and/or competencies

What is maximum total amount you can lose on these purchases : Today, you purchased 100 shares of Lazy Z stock at a market price of $47 per share. You also bought a one year, $45 put option on Lazy Z stock at a cost of $0.15 per share. What is the maximum total amount you can lose on these purchases?

Discuss appropriate economic predictors : PAD 520- Discuss the results of research, identifying models used to obtain the results. Provide available federal data. Discuss appropriate economic predictors. Propose at least three reliable, implementable recommendations.

User Account

All Pages