b) Ruth paid $300 for a call option on 100 shares of stock. The option gives her the right to buy the stock for $37 per share until April 1. On March 15, the stock rises to $42 per share, and Ruth exercises her option, purchases the stock and then sells it in the market. What is Ruth's return on the option? (Show all workings)

c). What is the difference between a discount yield and a bond equivalent yield? Which yield is used for Treasury bill quotes? (Show all workings)

d). Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $24,950,000, with the promise to buy them back at a price of $25,000,000. Calculate the yield on the repo if it has a 14-day maturity. (Show all workings)

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b Ruths return on the option Given Ruth paid 300 for a call option on 100 shares of stock The option gives her the right to buy the stock for 37 per s... View the full answer