Question: please answer all questions ! Consider a stock priced at $30 with a standard deviation of .3. The risk-free rate is 05 . There are

please answer all questions !

Consider a stock priced at $30 with a standard deviation of .3. The risk-free rate is 05 . There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European. Assume that all transactions consist of 100 shares or one contract (100 options). Use this information to answer questions 5 through 11. 5. What is your profit if you buy a call contract, hold it to expiration and the stock price at expiration is $37 ? a. $700 b. $289 c. $2,711 d. $411 e. cannot be determined 6. What is the breakeven stock price at expiration on the transaction described in problem 5 ? a. $32.89 b. $30.00 c. $27.11 d. $32.15 e. there is no breakeven 7. What is the potential maximum profit on the transaction described in problem 5 ? a. $2,711 b. infinity c. zero d. $3,289 e. $3,000 8. Suppose the investor constructed a covered call. At expiration the stock price is $27. What is the investor's profit? [Pft=STSO+C if ST>X] a. $589 b. $289 c. $2,989 d. $2,711 e. $11

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Please show your work. Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to...

I need a step by step solutions for the 10 problems in the excel file. The correct answers are provided I only need the solutions steps. Subject is Finance (options valuation) On March 2, a Treasury...

Can you please solve the attached 4 problems that are very similar to the ones we did before with just different numbers by using the same models. I only had difficulties with four questions, the...

Consider a stock priced at $30 with a standard deviation of 3. The risk-free rate is .05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The...

Question 1\ 3 pts\ Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05 . There are put and call options available at exercise prices of 30 and a time to...

Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months....

1) Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six...

please answer only questions # 9, 10, & 11 , everything else has already been answered!!!!! Consider a stock priced at $30 with a standard deviation of 3 . The risk-free rate is .05 . There are put...

Question 3 (Basic Option Strategies) (4 marks) Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices...

it should be converted to an annualized volatility Onone of the above QUESTION 14 5 pc Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and...

The partners in Crawford Company decide to liquidate the firm when the balance sheet shows the following. The partners share income and loss 5:3:2. During the process of liquidation, the following...

Wakky Company produces widgets. In the table below, the company has begun the calculation of the standard cost to make one widget. Using the standard manufacturing overhead data provided, complete...

In May 2012, social media giant Facebook's initial public offering (IPO) on the New York NASDAQ Stock Exchange raised $16 billion (the third largest amount in US history) from investors buying shares...

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments. January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash...