Solution-Purchase of the options contract

Purchase of the options contract

Reference no: EM131152458

Suppose you are a conservative investor and own 100 shares of Apple stock. The price of a share is $200. You purchase a covered put for 100 shares at a striking price of $190, and the cost of the option contract is $200 ($2 per share). Compared to before the purchase of the options contract, what happens to your financial net worth if the price of the stock declines to $185?

Reference no: EM131152458

Questions Cloud

Discuss how ethnocentrism affects individuals and societies : Watch the movie or TV show that you selected, and use your reactions as part of your response to the following topic: Define ethnocentrism. Discuss how ethnocentrism affects individuals and societies.

Future value of an annuity due : Future Value of an Annuity Due If the future value of an ordinary, 5-year annuity is $6,400 and interest rates are 8 percent, what's the future value of the same annuity due?

What are the marginal effects of capital and labor on output : What are the elasticities of output with respect to labor and capital for each industry? What are the marginal effects of capital and labor on output? Interpret the regression results. Do the coefficients have the expected signs?

Broader concept of lean production : Explain how JIT manufacturing (of which TPS is an example) or the broader concept of Lean production is related to the concept of providing value in the eyes of the customer. Give two examples (other than Toyota) of companies that use the Lean or JIT..

Purchase of the options contract : Compared to before the purchase of the options contract, what happens to your financial net worth if the price of the stock declines to $185?

Provide a history of its use as a weapon of mass destruction : Select one of the four primary categories of terrorist hazards (Chemical, Biological, Radiological/Nuclear, Explosives). Provide a history of its use as a weapon of mass destruction (WMD); describe how it is made and dispersed, signs and symptoms ..

Present value of multiple annuities : A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $2,200 per month for the next three years and then $3,200 per month for the two years after that. If the bank is charging customers 7.00 percent..

What is the adjusted present value of the project : What is the adjusted present value of the project? keep in mind interest rate tax shield.

Explain what media disposition means : Briefly explain what needs to be accomplished before your company monitors the activities of authorized users of your company systems, and then explain what should be accomplished to legally monitor the activities of a hacker (unauthorized user) o..

User Account

All Pages

Purchase of the options contract

Reference no: EM131152458

Reference no: EM131152458

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT