Suppose you buy a Merck put for $2.50 which matures in September with a strike price of

Fantastic news! We've Found the answer you've been seeking!

Question:

Suppose you buy a Merck put for $2.50 which matures in September with a strike price of $50. Merck is
currently trading at $51.75. If the stock price of Merck falls to $46, What is the rate of return of your put option?

Related Book For answer-question

Fundamentals of Investing

ISBN: 978-0133075359

12th edition

Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk

See More Books

Posted Date: Apr 27, 2024 05:24 AM

See More Questions

Select the correct answer option: Which is correct? Self-employed persons only have responsibility for their own safety. Self-employed person do not have responsibility for their own safety or that...
What does the Black-Sholes-Merton stock option pricing model assume about the probability distribution of the stock price in one year? What does it assume about the continuously compounded rate of...
An inverted pyramidal tank has an equilateral triangular base measuring 3 ft. on a side and an altitude of 7 ft. DSMIT adi a. How many gallons of water can the tank hold? b. What will be the wetted...
Write the condensed formula of the following alkane. H-C C-H
Rewrite this measurement with a simpler unit, if possible. kg.m 9.3 2 m m 2
Starting with Eq. (4.1-10), show that if $\Delta v \ll \bar{v}$ and $r \ll 2 c / \Delta v$ for all $P_{1}$, then \[ \mathbf{u}\left(P_{0}, t ight) \approx \iint_{\Sigma} \frac{e^{j 2 \pi(r /...
Universal Bank is a relatively young bank growing rapidly in terms of overall customer acquisition. The majority of these customers are liability customers (depositors) with varying sizes of...
A disk (Idisk = 12MR2) of mass 200kg and radius 2m is rotating at rad/s. A small object of mass 40 kg then collides with and sticks to the disk at a location halfway between the center and the edge....
Describe how an organization's culture and the use of performance criteria and standards affect the remaining components of a performance management system. Write answer according to marks.(6marks)
How do adaptive radiations contribute to the rapid diversification of life forms, and what ecological and evolutionary conditions are typically associated with these bursts of speciation and...
A sprinter runs the curve of this 2 0 0 m in 1 3 . 2 8 s . Assume he ran in a lane which makes a semicircle ( r = 3 6 . 1 m ) for the first part of the race. At 3 . 0 6 s into the race his speed is 4...
A 7 . 4 5 - nC charge is located 1 . 8 6 m from a 4 . 5 0 - nC point charge. ( a ) Find the magnitude of the electrostatic force that one charge exerts on the other.
What are the evolutionary dynamics underpinning coevolutionary relationships, such as those observed in host-parasite interactions or mutualistic partnerships, and how do these dynamics shape the...
An object with mass m 1 = 4 . 0 0 k g , rests on a frictionless horizontal table and is connected to a cable that passes over a pulley and is then fastened to a hanging object with mass m 2 = 1 1 . 0...
Create an organizational behavior modification (OBM) plan to define four (4) key behaviors that are required for successful job performance as a retail sales associate. Suggest the significant ways...
6 (a) Briefly develop a mathematical model of the behaviour of a copper-twisted pair cable (b) Derive the magnetic energy from: w given that: K + w, where the - - k symbols have their usual meaning...
What are the four subfields of anthropology?
To what extent do you think there is a link between the product cycle theory as developed by Vernon and the Linder theory? Explain.
The UK government has recognized the importance of information and behavioural economics to decision-making. The government partly funds the Behavioural Insights Team (BIT) in conjunction with an...

Suppose you buy a Merck put for $2.50 which matures in September with a strike price of

Question:

Expert Answer:

To calculate the rate of return of the put option we need to d... View the full answer

Fundamentals of Investing

Students also viewed these finance questions