1. Investor has 3,000 of IBM currently valued at $101. He sets up a collar at $96...
Question:
1. Investor has 3,000 of IBM currently valued at $101. He sets up a collar at $96 with a premium of $11.08, and $110 with a premium of $12.54. When the collar expires the stock is trading at $90.90
a. The impact to the portfolio of this collar at the time it is put in place is $________. (dollars, rounded to two places after the decimal)
b. The value of the portfolio at the close on the day the collar expires is $________. (dollars, rounded to two places after the decimal)
2.You set up a Bull Spread on 100 shares of Home Depot using one $110 call @ $15.76 and one $122 call @ $8.22. At expiration Home Depot is trading at $129.47
a. You hold the spread to expiry so your profit (loss) is $________. (dollars, rounded to two places after the decimal)
Financial Accounting and Reporting a Global Perspective
ISBN: 978-1408076866
4th edition
Authors: Michel Lebas, Herve Stolowy, Yuan Ding