What is the call profit for the buyer

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1. An annuity-due has 40 quarterly payments of $50 followed immediately by a perpetuity with quarterly payments of X. Find X, if the present value is 2000, at an annual effective rate of 16%.

(a) 194 (b) 151 (c) 157 (d) 167 (e) 179

2. Linus deposits 100 into an account at the end of each year for 20 years. This account earns interest at an annual effective rate of 5%. Lucy deposits money into an account at the end of each year for 20 years. Her account also earns interest at an annual effective rate of 5%. Her deposits are: P, 2P, ... , 20p. At the end of 20 years the accumulated amounts are the same. Find P.

(a) 10.93 (b) 11.05 (c) 11.12 (d) 11.23 (e) 11.35

3. The premium on a call option on a stock index with a strike price of $1,050 is $9.39. After 2 months, the position is closed and the index spot price is $1,072. What is the call profit for the buyer?

A. 9.3

B. 9.39

C. 10.71

D. 12.61

E. 11.97

Reference no: EM131889918

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