User Account

All Pages

What is total value of the investment for alternative a

Assignment Help Other Subject
Reference no: EM132629204

Suppose you think Tesla stock is going to appreciate substantially in value in the next year. Say the stock's current price, S, is $400, and a call option expiring in one year has an exercise price, X, of $390 and is selling at a price, C, of $40. With $40,000 to invest, you are considering three investment alternatives.

Alternative A: Invest all $40,000 in the stock, buying 100 shares.

Alternative B: Invest all $40,000 in 1,000 options (10 contracts).

Alternative C: Buy 100 options (one contract) for $4,000, and invest the remaining fund in a money market fund paying 8% annual interest.

Suppose Tesla stock goes up in price to $600 one year later.

a. What is total value of the investment for alternative A?(sample answer: $185.75)

b. What is your rate of return for alternative A?(sample answer: 25.30%)

c. What is total value of the investment for alternative C?(sample answer: $185.75)

d. What is your rate of return for alternative C?(sample answer: 25.30%)

Reference no: EM132629204

Questions Cloud

Explain the audit expectation gap : Explain the audit expectation gap. what causes the gap? Causes of the expectation gap from a performance gap include self-interest, auditors receiving
What is the company wacc-quinlan enterprises : Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at year end (D1 = $2.50), and the dividend is expected to grow
What is the expected return from the stock : A stock has a beta of 1.5, the expected return on the market is 6.5% and the risk free rate of return is 2.5%. What is the expected return from the stock?
What was the selling price of the bonds as a percentage : What was the selling price of the bonds as a percentage of the face value? What is the contractual rate of interest for this bond issue?
What is total value of the investment for alternative a : Suppose you think Tesla stock is going to appreciate substantially in value in the next year. Say the stock's current price, S, is $400, and a call option expir
Present value of the ?liability-ronen consulting : Ronen Consulting has just realized an accounting error that has resulted in an unfunded liability of ?$370,000 due in 27 years.
Explain the ratios of the financial statements : Could a tutor please explain the ratios of the financial statements of the company Amazon?
Calculate the impact on retained earnings : Calculate the impact on retained earnings. The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine
Find the joint probability function for snap and aapl : Find the joint probability function for SNAP and AAPL. Calculate the covariance between SNAP and AAPL returns

Reviews

Write a Review

Other Subject Questions & Answers

  Cross-cultural opportunities and conflicts in canada

Short Paper on Cross-cultural Opportunities and Conflicts in Canada.

  Sociology theory questions

Sociology are very fundamental in nature. Role strain and role constraint speak about the duties and responsibilities of the roles of people in society or in a group. A short theory about Darwin and Moths is also answered.

  A book review on unfaithful angels

This review will help the reader understand the social work profession through different concepts giving the glimpse of why the social work profession might have drifted away from its original purpose of serving the poor.

  Disorder paper: schizophrenia

Schizophrenia does not really have just one single cause. It is a possibility that this disorder could be inherited but not all doctors are sure.

  Individual assignment: two models handout and rubric

Individual Assignment : Two Models Handout and Rubric,    This paper will allow you to understand and evaluate two vastly different organizational models and to effectively communicate their differences.

  Developing strategic intent for toyota

The following report includes the description about the organization, its strategies, industry analysis in which it operates and its position in the industry.

  Gasoline powered passenger vehicles

In this study, we examine how gasoline price volatility and income of the consumers impacts consumer's demand for gasoline.

  An aspect of poverty in canada

Economics thesis undergrad 4th year paper to write. it should be about 22 pages in length, literature review, economic analysis and then data or cost benefit analysis.

  Ngn customer satisfaction qos indicator for 3g services

The paper aims to highlight the global trends in countries and regions where 3G has already been introduced and propose an implementation plan to the telecom operators of developing countries.

  Prepare a power point presentation

Prepare the power point presentation for the case: Santa Fe Independent School District

  Information literacy is important in this environment

Information literacy is critically important in this contemporary environment

  Associative property of multiplication

Write a definition for associative property of multiplication.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd