Reference no: EM132751159
The common stock of Company XLT and its derivative securities currently trade in the market at the following prices and contract terms:
Stock XLT Call option on Stock XLT Put option on Stock XLT
Price ($) 21.50 5.50 4.50
Exercise Price ($) - 21.00 21.00
Both of these options will expire 91 days from now, and the annualized yield for the 91-day Treasury bill is 3.0 percent.
Problem a. Briefly explain how to construct a synthetic Treasury bill position.
Problem b. Calculate the annualized yield for the synthetic Treasury bill in part (a) using the market price data provided.
Problem c. Describe the arbitrage strategy implied by the difference in yields for the actual and synthetic T-bill positions. Show the net, riskless cash flow you could generate assum-ing a transaction involving 21 actual T-bills and 100 synthetic T-bills.
Problem d. What is the net cash flow of this arbitrage strategy at the option expiration date, assuming that Stock XLT trades at $23 at expiration three months from now
|
Journalize the adjusting entry for the inventory shrinkage
: Journalize the adjusting entry for the inventory shrinkage for Omega Tire Co. for the fiscal year ended August 31, 20Y4
|
|
What will be the cost of inventory that abc should budget
: XYZ Company prices its products by adding 30%, What will be cost of the inventory that ABC should budget for purchases in April? Please and explain your work.
|
|
What is its normal balance
: Is Estimated Returns Inventory an asset, liability, or stockholders' equity account, and what is its normal balance
|
|
Social study and emotional development
: How an infant's early social- emotional experience have direct consequences for neural and physiological development - strengthen scientific writing and primary
|
|
What is the net cash flow of this arbitrage strategy
: What is the net cash flow of this arbitrage strategy at the option expiration date, assuming that Stock XLT trades at $23 at expiration three months
|
|
Should the sales tax be recorded at the time of sale
: A sale of merchandise on account for $36,000 is subject to an 8% sales tax. Should the sales tax be recorded at the time of sale or when payment is received
|
|
Find What are the monthly lease payments
: What are the monthly lease payments (before tax)? You have $2,000 for a down payment. The term of the lease is three years and the interest rate is 7.5% APR.
|
|
What account is debited by Elkhorn Company
: Elkhorn Company purchased merchandise on account from Springhill Company for $42,000, What account is debited by Elkhorn Company to record the return
|
|
What ramsey share of vapor income is
: On January 1, 2019, Ramsey Company purchased 35%,Ramsey accounted for the investment using the equity method. what Ramsey's share of Vapor's income for 2019 is?
|