User Account

All Pages

What will nico profit be on the stock transaction

Assignment Help Financial Accounting
Reference no: EM132956916

Nico Yong is considering the purchase of 100 shares of Cisco Systems stock at $22 per share. Because the economy is picking up, Nico believes the demand for Oracle's router systems will increase substantially causing the price of Cisco's shares to increase to $30 per share. As an alternative, Nico is considering the purchase of a call option for 100 shares of Cisco at with an exercise price of $25. This 180 day option will cost Nico $200. Assume no brokerage costs or dividends.

Problem (a) What will Nico's profit be on the stock transaction if he decides to buy the stock and its price does increase to $30 per share and he sells?

Problem (b) How much will Nico earn on the option transaction if he purchases the option and the underlying stock price rises to $30?

Problem (c) How much must the stock price rise for Nico to break even on the option transaction?

Problem (d) Based on parts (a) and (b) above, what should Nico do? Explain.

Reference no: EM132956916

Questions Cloud

Trends in labor and employment environment : Below are some predicted trends in labor and employment environment.
How a change in the fair value of a firm : Question - How a change in the fair value of a firm's trading securities affect its cash flow from investing activities
What are the primary benefits of a diverse organization : Diversity presents both challenges and opportunities for any organization? Explain briefly
What amount should be reported as sales for the current year : ABC Company reported sales revenue of P4,600,000 in the income statement for the year ended December. What amount should be reported as sales
What will nico profit be on the stock transaction : What will Nico's profit be on the stock transaction if he decides to buy the stock and its price does increase to $30 per share and he sells?
Determine the carrying amount of the bonds as of january : As of December 31 of the same year, the bonds were found to have a fair value of 10,500,000. Determine the Carrying amount of the bonds as of January
What is the rate earned on stockholders equity for year : Question - If net income is $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on stockholders' equity for Year 2
Calculate the net present value of the dock : The company anticipates annual cash flows of $140,000 resulting from the new clock. Calculate the net present value of the dock
What is the gross investment in the lease : The entity expects a 12% return. At the end of the lease term, the equipment will revert to the lessor. What is the gross investment in the lease

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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