2. An investor buys a call option of Syarikat TNT at an exercise price of RM6.00,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
2. An investor buys a call option of Syarikat TNT at an exercise price of RM6.00, premium RM0.50 with a current market price of RM8.00 per share. (a) What is the investor's rational for entering into the strategy? If the current market price goes up to RM10.00, what is the profit/loss pay off for the investor? (b) (c) If the current market price declines to RM5.00, what is the profit/loss pay off for the investor? (d) Show the investor's break- even point. Consider KLCI 660 Call Option @20 has the following prices: (LONG CALL) Day 1 : 670 2: 665 3: 672 4 675 5: 685 Show your pay-off profile. What happen if you decide to exercise on day 5? 2. An investor buys a call option of Syarikat TNT at an exercise price of RM6.00, premium RM0.50 with a current market price of RM8.00 per share. (a) What is the investor's rational for entering into the strategy? If the current market price goes up to RM10.00, what is the profit/loss pay off for the investor? (b) (c) If the current market price declines to RM5.00, what is the profit/loss pay off for the investor? (d) Show the investor's break- even point. Consider KLCI 660 Call Option @20 has the following prices: (LONG CALL) Day 1 : 670 2: 665 3: 672 4 675 5: 685 Show your pay-off profile. What happen if you decide to exercise on day 5?
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Consider the ODE dy dt =-1.2y+7e-03; y(t = 0) = 3 The solution to the above equation with the initial condition 70 43 -0.3t -1.2t y= (a) Plot the above solution between 0
-
An investor buys a call at a price of $4.50 with an exercise price of $40. At what stock price will the investor break even on the purchase of the call?
-
14. The higher the amount of dividends a stock pays, the a. the lower its dividend yield. b. the higher the value of a call option. c. the value of a call will increase immediately after the...
-
Direct Materials Budget The MSC Company has anticipated its unit sales for the first half of 2022 as follows: 2022 Units January 12,000 February 14,000 March 15,000 16,000 17,000 18,000 April May...
-
For Problem 4.26 conditions, find an equivalent bolting pattern (bolt diameter, strength, length, and spacing), that provides the same thrust capacity.
-
At time \(t=0\) the valve on an initially empty (perfect vacuum, \(ho=0)\) tank is opened and air rushes in. If the tank has a volume of \(\forall_{0}\) and the density of air within the tank...
-
Why is monitoring and information disclosure critical for the success of emissions banking and trading?
-
Wilburton Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2009 were: Cash ....................$ 2,200 Accounts...
-
Find f''(x). f(x) = 7x2 f'(x) =
-
Consider the situation where you just received $10,000 pre-tax income this year and you are considering whether you should contribute part of the money to IRA or an annuity account, or just put the...
-
Given that X are the normally distributed and given the values of = 42, S = 5, = 40 and n = 20. Find the hypothesis test that = 8.
-
Xenor Corporation introduced a bond in 2002 that offered a coupon rate of 8 1/2%, resulting in coupon payments of $8.50. The bond is scheduled to mature in 2032. If the current going interest rate in...
-
With many companies merging in different countries, are cultures merging too? Why is that important to IHR? Why is human resources in the health care industry just as important as any other industry?
-
An employer has scheduled candidates for interviews. When one person is told of her interview time, she says she is unavailable due to caregiving responsibilities, and asks for another time. The...
-
An investor purchased $100,000 in a 5-year index-linked guaranteed investment certificate (GIC) in a non-registered account. The GIC matured at $110,000. Assuming he is in a 26% marginal tax bracket,...
-
Jeffrey is a 5 month old infant weighing 15lbs. (Infants <6 months old need 108 kcal/kg/d.) How many kcal should Jeffrey receive per day?
-
Advice comprehensively on the scope in relation to the Nigeria tax law Viathan seeks to engage with investors under a return-based financing structure without equity or debt infusion to expand its...
-
Refrigerant-134a enters an adiabatic compressor as saturated vapor at 120 kPa at a rate of 0.3 m3/min and exits at 1-MPa pressure. If the isentropic efficiency of the compressor is 80 percent,...
-
Restore the file Boston Catering. Do not use the file created in Exercise 1. Add the following transactions and then print a standard balance sheet as of 7/31/10. a. On 7/13/10, the company purchased...
-
Describe some of the investing activities you recorded for Wild Water in January.
-
Restore the file Boston Catering. Do not use the file created in Exercise 1. Add the following transactions and then print a standard balance sheet as of 7/31/10. a. On 7/13/10, the company purchased...
Study smarter with the SolutionInn App