Turn back to Figure and look at the Intel options. Suppose you buy a November expiration call
Question:
a. Suppose the stock price in November is $21.75.Will you exercise your call? What is the profit on your position?
b. What if you had bought the November call with exercise price $22?
c. What if you had bought a November put with exercise price$22?
PRICES AT CLOSE, OCT 14, 2009 Intel (INTC) Call ast Volume Open Interest Underlying stock price: 20.8:3 Put ast Volume Open Interest Expiration Strike Oct 2009 20.00 0.84 Nov 2009 20.00 1.21 Jan 2010 20.00 1.66 Apr 2010 20.00 2.10 Oct 2009 21.00 0.17 Nov 2009 21.00 0.64 23848 Jan 2010 21.00 1.11 Apr 2010 21.00 1.58 Oct 2009 22.00 0.02 Nov 2009 22.00 0.30 Apr 2010 22.00 1.15 36929 101414 0.03 30765 0.52 1275180.98 4990 1.50 8897 7979 3376 414 93413 0.33 21907 6407 2440 1355 2048 959 52083 4709 684 77484 22091 2073 10327 25995 2213 25003 0.94 34338 1.41 6063 1.98 107054 1.22 273731.63 60439 7701 8582 3967 4235 828 6865 762 191 2679
Step by Step Answer:
a Since the stock price exceeds the exercise price y...View the full answer
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
Students also viewed these Accounting questions
-
Turn back to figure and look at the Treasury bond maturing in February 2039. a. How much would you have to pay to purchase one of these notes? b. What is its coupon rate? c. What is the current yield...
-
Suppose a 6-month maturity call option with exercise price $80 currently sells for $10. Consider a portfolio with $6000 invested in three at-the-money call contracts and $4000 in 6-month T-bills to...
-
Turn to Figure and look at the listing for General Dynamics. a. How many shares could you buy for $5,000? b. What would be your annual dividend income from those shares? c. What must be General...
-
The par yield curve for U.S. Treasury bonds is currently flat across all maturities at 5.50 percent. You have observed following "paired" transaction by your bond portfolio manager: Bond G H...
-
Each of these is the graph of a polynomial function with leading coefficient ( = 1 or ( = -1. i. ii. iii. iv. a. Write a function in factored form that will produce each graph. b. Name the zeros of...
-
A simply supported beam (see figure) is 64 feet long and has a load at the center. The deflection of the beam at its center is 1 inch. The shape of the deflected beam is parabolic. (a) Write an...
-
Would the critical Rayleigh number for flow transition for the Bnard problem increase or decrease with the Prandtl number? Explain why in terms of the physics of the problem.
-
Neutron Stars and Super nova Remnants the Crab Nebula is a cloud of glowing gas about 10 light-years across, located about 6500 light years from the earth (Fig. 9.39). It is the remnant of a star...
-
2-1. GASB Concepts Statement No. 3 discusses various methods of communicating financial accounting information to users. One method is using required supple- mentary information (RSI). What is RSI,...
-
The Graphic Palette is a firm in Charleston, South Carolina, that does graphic artwork and produces color and black-and-white posters, lithographs, and banners. The firm's owners, Kathleen and...
-
Look at the futures listings for the corn contract in Figure. a. Suppose you buy one contract for March delivery. If the contract closes in March at a level of 3.875, what will your profit be? b. How...
-
Why do call options with exercise prices greater than the price of the underlying stock sell for positive prices?
-
Nakagama Limited owns 10,000 common shares of Deal Inc. purchased for selling in the near term. The carrying value of Deal Inc.'s common shares at November 30, 2014, is $46,000. The fair value of the...
-
X, Y and Z have been in partnership for several years, sharing profits and losses in the ratio 3:2:1. Their last statement of financial position which was prepared on 31 October 2016 is as follows:...
-
In addition to changing her center of gravity, a dancer may change her moment of inertia. Consider her moment of inertia about a vertical axis through the center of her body. When she raises her arms...
-
Figure 4.30 b showed a situation in which the force of the road on the car's tire points forward. In other situations, the force points backward. Give an example of such a situation. FIGURE 4.30...
-
The following trial balance has been extracted from the books of Gain and Main as at 31 March 2015; Gain and Main are in partnership sharing profits and losses in the ratio 3 to 2: In appropriating...
-
You are now going to do a simple breakeven point for number of passengers on a flight for the years 20x4 to 20x6. Go to the worksheet that says Template for DB 3.2. Complete the breakeven analysis...
-
Among 200 items, there are 10 defective. If you choose at random 20, what is the probability, that all will be non-defective?
-
Write the expression in radical notation. Then evaluate the expression when the result is an integer. 23 -1/2
-
How many objects are eligible for garbage collection at the end of the main() method? A. None. B. One. C. Two. D. Three. E. The code does not compile. F. None of the above. package store; public...
-
Which of the following is consistent with a steeply upwardly sloping yield curve? a. Monetary policy is expansive and fiscal policy is expansive. b. Monetary policy is expansive while fiscal policy...
-
Consider two firms producing smart phones. One uses a highly automated robotics process, whereas the other uses workers on an assembly line and pays overtime when there is heavy production demand. a....
-
Consider two firms producing smart phones. One uses a highly automated robotics process, whereas the other uses workers on an assembly line and pays overtime when there is heavy production demand. a....
-
On-campus corporate presentations: Sympathy for the Devil Many students complain about the high number of corporate presentations taking place both on- and off-campus. In this question, we seek to...
-
How do organizations cultivate a culture of open innovation, leveraging crowdsourcing platforms, collaborative networks, and cross-industry partnerships to harness external knowledge and drive...
-
Braeden Sim is the accountant for Sim's Internet Service. From the following information, his task is to construct a balance sheet as of April 30, 201X, in proper form. Could you help him? (Click the...
Study smarter with the SolutionInn App