Question

Mr. Henderson buys a share of Intel stock at $60. Plot the profit (Y axis) of this stock against the stock price (P). Show the calculations of key points.

Answer #1

Profit will be computed as Selling price- Purchase price

A call option on Target stock currently has a price of $4, a
strike price of $60, and an expiration date in 30 days. If Mr.
Anderson sells a call option contract, plot the (net) profit (Y
axis) of this call option contract against the stock price (P; X
axis). Show the calculations of key points.

Intel stock price is $21 and Intel stock put
option with a strike price X=$25 and August expiration has
a premium P=$5.5 as of right now. You just bought the put
option at P=$5.5 and will hold it till the expiration date.
1) For the option premium, how much are the intrinsic value and
time value? (4 points)
2) What would be your profit / loss if the stock price of Intel
is $30 on the expiration date? (3 points)...

The recent price per share of Company X is $50 per share. Verna
buys 100 shares at $50. To protect against a fall in price, Verna
buys 100 put, covering 100 shares of Company X, with a strike price
of $40. The put premium is $1 per share. If Company X closes at $45
per share at the expiration of the put, and Verna sells her shares
at $45. What would be Verna's total profit and loss from investing
in...

An investor buys 300 shares of stock selling at $110 per share
using a 60% initial margin and a 30% maintenance margin. The stock
does not pay a dividend. A margin loan can be obtained at an annual
interest rate of 5%. What is the annualized return on invested
capital if the stock price gradually increases to $124 at the end
of one year? (include the interest on the margin loan.)
Annualized rate of return =
_________________________%

An investor buys $10,000 worth of stock priced at $40 per share
using 60% initial margin. The broker charges 10% on the margin loan
and requires a 35% maintenance margin. The stock pays $2.00-per
share dividend in 1 year, and then the stock is sold at $50 per
share. What was the investors rate of return?

An investor buys a put option on a share for $4.The stock price
is $45 and the strike price if $40.Explain under what circumstances
the investor makes a profit and under what circumstances will the
option be exercised. Sketch a diagram showing the variation of the
investor's profit with the stock price at the maturity of the
option. (Please explain the answer in detail, thank you)

An investor buys $16,000 worth of a stock priced at $20
per share using 60% initial margin. The broker charges 8% on the
margin loan and requires a 35% maintenance margin. If the stock is
sold at $23 per share in one year, what was the investorâ€™s rate of
return?
Input your answer as a percentage with 2 decimal places,
without the %. For example, 20.27.

Mr. Sam opened an account to short-sell 50,000 shares of MSFT at
$60 per share. Assume that the margin account pays no interest, and
that the initial margin requirement was 60%. 1. What is the initial
margin invested by Mr. Sam? 2. If after one year, the price of MSFT
has risen from $60 to $66, and the stock has paid a dividend of $1
per share. a) What is the remaining margin in the account in
dollars and as...

An investor buys a European call on a share for $3. The stock
price is $40 and the strike price is $42.
a. Under what circumstances does the investor make a profit?
b. Under what circumstances will the option be exercised?
c. What is the potential loss for the investor?
d. Identify the variation of the investor's loss with the stock
price at the maturity of the option?

(a) On 24 March 2020 an ANZ share was trading at
$14.60 in ASX. The premium of Calls option with a strike price
(exercise price) of $16.00 with an expiry date on the month of your
next birthday was $1.00 per share. Draw the line curve of return
(Profit/Loss) from the investment in this option against share
price varying from $0 to $30. (Draw the price per share on X-axis
from $0 to $30 and Profit/Loss in Y-axis. Must use...

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