# Question

Mr. Cabinet is interested in the payoffs to combinations of options. Graph the intrinsic values of the following portfolios (all options expire on the same day and are written on the same non-dividend-paying asset).

a. Long one call, strike = $25; long one put, strike = $20

b. Short one call, strike = $25; long one put, strike = $15

c. Long one call, strike = $25; short one put, strike = $25

d. Long one call, strike = $25; short one share of underlying asset

e. Long one call, strike = $25; short one share; $25 in cash

f. Long one put, strike = $25; long one share; short $25 in cash (i.e., repay loan)

a. Long one call, strike = $25; long one put, strike = $20

b. Short one call, strike = $25; long one put, strike = $15

c. Long one call, strike = $25; short one put, strike = $25

d. Long one call, strike = $25; short one share of underlying asset

e. Long one call, strike = $25; short one share; $25 in cash

f. Long one put, strike = $25; long one share; short $25 in cash (i.e., repay loan)

## Answer to relevant Questions

You have observed that a very smart and successful investor has bought a call and a put on the S&P/TSX Index. The options have the same strike prices and expire on the same day. What does the smart investor think is going to ...Richards & Co. Analysts has provided the following partially completed table of information about different securities. All options are written on XCT, a non-dividend-paying stock, and expire on the same day in one year. ...QBV, a non-dividend-paying stock, is currently trading for $100 a share. There is a 25-percent chance that the stock will trade for $85 in one year, and a 75-percent chance that the price will increase to $135. The risk-free ...Xiang Zhu, a client of FinCorp Inc., has phoned you with a question. She has been reading a finance textbook and cannot understand how to use the binomial option pricing model to value a call option. The underlying stock is ...Assume that BigCo’s cost of capital for all the projects is 7 percent. Calculate the NPV, IRR, payback period, discounted payback, and profitability index for each project in Table 1. The firm requires a payback period of ...Post your question

0