Business, 29.10.2020 17:40, campbelldean
The common stock of the C. A.L. L. Corporation has been trading in a narrow range around $50 per share for months, and you believe it is going to stay in that range for the next three months. The price of a three-month put option with an exercise price of $50 is $4, and a call with the same expiration date and exercise price sells for $7.
Required:
a. What would be a simple options strategy using a put and a call to exploit your conviction about the stock price's future movement?
b. What is the most money you can make on this position? How far can the stock price move in either direction before you lose money?
c. How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration? The stock will pay no dividends in the next three months. What is the net cost of establishing that position now?
Answers: 2
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Bakery has bought 250 pounds of muffin dough. they want to make waffles or muffins in half-dozen packs out of it. half a dozen of muffins requires 1 lb of dough and a pack of waffles uses 3/4 lb of dough. it take bakers 6 minutes to make a half-dozen of waffles and 3 minutes to make a half-dozen of muffins. their profit will be $1.50 on each pack of waffles and $2.00 on each pack of muffins. how many of each should they make to maximize profit, if they have just 20 hours to do everything?
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The green fiddle has declared a $5 per share dividend. suppose capital gains are not taxed, but dividends are taxed at 15 percent. new irs regulations require that taxes be withheld at the time the dividend is paid. green fiddle stock sells for $71.50 per share, and the stock is about to go ex-dividend. what will the ex-dividend price be?
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