What is your profit from buying the stock

Assignment Help Financial Accounting
Reference no: EM132969803

Question - You have bought 1 share of stock for $31.34 and 1 put option on the same stock. The option has an exercise price of $30, costs $3.76, and expires in 8 months.

1. What is your profit from buying the stock if the stock price is $20 in 8 months (in $)? Ignore the option for now.

2. What is your profit from buying the option if the stock price is $50 in 8 months (in $)? Ignore the stock for now.

3. What is your total profit if the stock price is $100 in 8 months (in $)?

4. What is this portfolio called?

Reference no: EM132969803

Questions Cloud

Calculate the present value of rm received from power plant : Calculate the present value of RM 2,500,000 (future value) received from Power Plant Project in five years (i.e., 2026) from today (i.e., 2021)
Determine the npv of the project for ajax corporation : Years 7-10 will see cash inflows of $200,000. If the company's required rate of return is 9%, determine the NPV of the project.
What is insurance accounting : What is insurance accounting? Give some examples and discuss it please. For general-purpose financial reporting purposes
Compute annual depreciation for the first and second years : Assuming the declining-balance depreciation rate is double the straight-line rate, compute annual depreciation for the first and second years
What is your profit from buying the stock : What is your profit from buying the stock if the stock price is $20 in 8 months (in $)? Ignore the option for now
What is the real cash flow for year two : Your firm expects to receive a cash flow,If the real rate of interest is 2 per cent and the inflation rate is 4 per cent, what is the real cash flow for year 2?
Identify the essential elements of a valid contract : Identify the essential elements of a valid contract and discuss whether those elements exist between Facebook and its users based on the terms of service
What is the amount of the initial cash flow for expansion : Jamestown Ltd. currently produces boat sails and is considering expanding its operation. What is the amount of the initial cash flow for this expansion project?
What is the book value of the equipment at end of two years : Capital equipment costing $250,000 today, If the straight-line depreciation method is used, what is the book value of the equipment at the end of two years?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare the journal entry to record the issuance of bonds

Prepare the journal entry to record the issuance of the bonds, the payment of interest and amortization of premium or discount

  Prepare an adjusted trial balance on december

Prepare an adjusted trial balance on December 31, 2020. Prepare an income statement for the year ended December 31, 2020. List expenses in alphabetical order.

  Federal policies of negotiation with selected faction

Over the last two hundred years, there have been various strategies employed by the U.S. government to disrupt tribal unity and enforce "civilization".  For example, the use of scouts by the government in the 19th century, land allotments, boarding s..

  What is the probability of any network failure

The following table provides the yearly expected cost of a risks associated with IT network interruptions, What is the probability of any network failure

  How your journal entry on the settlement date would change

Prepare dated journal entries for Fleming to reflect above transactions using the net method. Do not use hedge accounting. Explain how your journal entry on the settlement date would change if the receivable was hedged.

  Create sophisticated transactions and investment vechicles

Investment advisers and tax professionals are continuously striving to create sophisticated transactions and investment vechicles (i.e., tax advantaged investments) that are designed to provide economic benefits to investors by reducing their taxes.

  Ending inventory assuming lifo

Dunbar sold 590 units of inventory during the month. Ending inventory assuming LIFO would be (Do not round your intermediate calculations. Round your answer to the nearest dollar amount):

  Compute the incremental income if bartel processes further

Alternatively, Bartel can process the units further at an incremental cost of $36 per unit. If Bartel processes further, the units can be sold for $100 each. Compute the incremental income if Bartel processes further.

  What is the number of shares that should be used

What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, year 2?

  Two types of handbags-standard and custom

Wilkins Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if t..

  Evaluate what is the adjusting entry

The monthly rental is ?120,000. On December 31, 20x1, the rent for the months of November and December 20x1 are not yet paid. What is the adjusting entry?

  What additional funds needed for the coming year

Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. For example, an answer.

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!

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