When you open a brokerage account, you typically sign an agreement giving the broker the right to lend your shares without notifying or compensating you. Why do brokers want you to sign this agreement?
Answer to relevant QuestionsSuppose a stock pays a quarterly dividend of $3. You plan to hold a short position in the stock across the dividend ex-date. What is your obligation on that date? If you are a taxable investor, what would you guess is the ...Suppose the stock price is $40 and the effective annual interest rate is 8%. a. Draw on a single graph payoff and profit diagrams for the following options: (i) 35-strike call with a premium of $9.12. (ii) 40-strike call ...a. Suppose you enter into a short 6-month forward position at a forward price of $50. What is the payoff in 6 months for prices of $40, $45, $50, $55, and $60? b. Suppose you buy a 6-month put option with a strike price of ...Suppose you invest in the S&R index for $1000, buy a 950-strike put, and sell a 1107 strike call. Draw a profit diagram for this position. How close is this to a zero-cost collar? Construct a spreadsheet for which you can input up to five strike prices and quantities of put and call options bought or sold at those strikes, and which will automatically construct the total expiration payoff diagram for ...
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