JTM pays its C-suite officers with stock options. Treasury asked you to price them. JTM's stock...

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JTM pays its C-suite officers with stock options. Treasury asked you to price them. JTM's stock trades at $22.50/share; U.S. Treasurys, aka the risk-free rate, yield 1.50% and stock's volatility is 22%. The details of the stock option offers are below. What are the prices of the options? Exercise Price Maturity (yrs.) CEO 20.00 14.0 CFO 18.00 10.0 CIO 17.00 9.0 b. JTM's treasury unit bought jet fuel futures to hedge its expenses. It uses 39feM gallon/yr. Each contract runs 42,000 gallons. The contract price locked JTM at $2.6111/gal. At maturity, JTM found that the spot price was $2.6050/gal. In effect, had they not taken the futures, they'd have paid less. What was the loss on the contract? JTM pays its C-suite officers with stock options. Treasury asked you to price them. JTM's stock trades at $22.50/share; U.S. Treasurys, aka the risk-free rate, yield 1.50% and stock's volatility is 22%. The details of the stock option offers are below. What are the prices of the options? Exercise Price Maturity (yrs.) CEO 20.00 14.0 CFO 18.00 10.0 CIO 17.00 9.0 b. JTM's treasury unit bought jet fuel futures to hedge its expenses. It uses 39feM gallon/yr. Each contract runs 42,000 gallons. The contract price locked JTM at $2.6111/gal. At maturity, JTM found that the spot price was $2.6050/gal. In effect, had they not taken the futures, they'd have paid less. What was the loss on the contract? JTM pays its C-suite officers with stock options. Treasury asked you to price them. JTM's stock trades at $22.50/share; U.S. Treasurys, aka the risk-free rate, yield 1.50% and stock's volatility is 22%. The details of the stock option offers are below. What are the prices of the options? Exercise Price Maturity (yrs.) CEO 20.00 14.0 CFO 18.00 10.0 CIO 17.00 9.0 b. JTM's treasury unit bought jet fuel futures to hedge its expenses. It uses 39feM gallon/yr. Each contract runs 42,000 gallons. The contract price locked JTM at $2.6111/gal. At maturity, JTM found that the spot price was $2.6050/gal. In effect, had they not taken the futures, they'd have paid less. What was the loss on the contract?

Answer rating: 100% (QA)

a CEO 289 CFO 250 CIO 219 ... View the full answer