Question

You have the following information about forward and options contracts on the same stock. All derivatives...

You have the following information about forward and options contracts on the same stock. All derivatives have one-year maturity. Risk-free rate is 10%. S0 = $45.25, F0,1 = %50, CK=45 = $7.70, CK=45 = $5.40, PK=45 = $3.20, and PK=50 = $5.40.

What is the profit if you hedge a short position of the stock with a 45-50 collar if the stock price at maturity is $47?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You have the following information about forward and options contracts on the same stock. All derivatives...
You have the following information about forward and options contracts on the same stock. All derivatives have one-year maturity. Risk-free rate is 10%. S0 = $45.25, F0,1 = $50, CK=45 = $7.70, CK=45 = $5.40, PK=45 = $3.20, and PK=50 = $5.40. What is the profit if you hedge a short position of the stock with a forward contract if the stock price at maturity is $47? Group of answer choices
ou have the following information about forward and options contracts on the same stock. All derivatives...
ou have the following information about forward and options contracts on the same stock. All derivatives have one-year maturity. Risk-free rate is 10%. S0 = $45.25, F0,1 = $50, CK=45 = $7.70, CK=45 = $5.40, PK=45 = $3.20, and PK=50 = $5.40. What is the payoff if you hedge a long position of the stock with a forward contract if the stock price at maturity is $47?
The following prices are available for call and put options on a stock priced at $50....
The following prices are available for call and put options on a stock priced at $50. The risk-free rate is 6 percent and the volatility is 0.35. The March options have 90 days remaining and the June options have 180 days remaining. Strike March (calls) June (calls) March (puts) June (puts) 45 6.84 8.41 1.18 2.09 50 3.82 5.58 3.08 4.13 55 1.89 3.54 6.08 6.93 Use this information to answer the following questions. Assume that each transaction consists of...
The following prices are available for call and put options on a stock priced at $50....
The following prices are available for call and put options on a stock priced at $50. The risk-free rate is 6 percent and the volatility is 0.35. The March options have 90 days remaining and the June options have 180 days remaining. Calls Puts Strike March June March June 45 6.84 8.41 1.18 2.09 50 3.82 5.58 3.08 4.13 55 1.89 3.54 6.08 6.93 Use this information to answer the following questions. Assume that each transaction consists of one contract...
For a stock with price 40, you have the following portfolio of barrier options, all expiring...
For a stock with price 40, you have the following portfolio of barrier options, all expiring in 3 months: (i) An up-and-in call, barrier 45, exercise price 40. (ii) An up-and-in call, barrier 50, exercise price 40. (iii) An up-and-out call, barrier 45, exercise price 40. (iv) An down-and-in call, barrier 35, exercise price 45. (v) An down-and-in put, barrier 35, exercise price 40. (vi) A down deferred rebate, barrier 32, payoff 5. During the 3 month period, the minimum...
The following prices are available for call and put options on a stock priced at $50....
The following prices are available for call and put options on a stock priced at $50. The risk-free rate is 6 percent and the volatility is 0.35. The March options have 90 days remaining and the June options have 180 days remaining. The Black-Scholes model was used to obtain the prices. Calls Puts Strike March June March June 45 6.84 8.41 1.18 2.09 50 3.82 5.58 3.08 4.13 55 1.89 3.54 6.08 6.93 Use this information to answer the following...
XYZ Stock currently trades for $45 per share. You find the following options matrix (prices of...
XYZ Stock currently trades for $45 per share. You find the following options matrix (prices of calls and puts) for a June 1st expiration date (which applies for all) 40 strike call option: $9                                40 strike put option: $2 45 strike call option: $4                                45 strike put option: $4 50 strike call option: $2                                50 strike put option: $9 55 strike call option: $1                                55 strike put option: $15 You believe that XYZ will be extremely volatile in the next...
1. This is September, and you have $4,000 to invest for three months. The stock price...
1. This is September, and you have $4,000 to invest for three months. The stock price is currently $40. A December call option with a $40 strike price is currently selling for $4. You have two strategies: Buy 100 shares Buy 10 call options (each call option has 100 shares) (1)Please evaluate the two strategies and fill out the blanks in the following table. Stock Price at Maturity (in December) Net Profit at Maturity Strategy a): Buy 100 shares Strategy...
What role could the governance of ethics have played if it had been in existence in...
What role could the governance of ethics have played if it had been in existence in the organization? Assess the leadership of Enron from an ethical perspective. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...