Question

40) You purchased 300 shares of a non-dividend paying stock for $25.2 a share 6 months...

40) You purchased 300 shares of a non-dividend paying stock for $25.2 a share 6 months ago. Today, you sold those shares for $36.1 a share. What was your percentage annualized rate of return on this investment?

41) You purchased 300 shares of SLG, Inc. stock at a price of $43.3 a share. You then purchased put options on your shares with a strike price of $40.00 and an option premium of $1.8. At expiration, the stock was selling for $47.7 a share. You sold your shares on the option expiration date. What is your net profit or loss your transactions related to SLG, Inc. stock?

Homework Answers

Answer #1

40)
Purchase price of share = 25.20
Selling Price of share = 36.1
Annualized return = (Sales price- Purchase price) / Purchase price * 12/ months = ((36.1 - 25.2)/25.2 * 12/6 = 86.51%

41)
Cost of share = 43.30
No of shares = 300
Total investment = 300 * 43.30 = 12990
Option Premium = 1.8
Total Invetment on put options = 300 * 1.8 = 540
Total Investment = 12990 + 540 = 13530
On or before expration date if you sold the option you will not be in the money and the the share will be sold at strike price
So Sales of stock = Strike price * no of shares = 40 * 300 = 12000
Loss from the transaction = 12000 - 13530 = -1530
Loss in the transaction = 1530.

Best of Luck. God Bless



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
1. Louis purchased 300 shares of stock on margin for $22.15 a share and sold the...
1. Louis purchased 300 shares of stock on margin for $22.15 a share and sold the shares eleven months later for $24.50 a share. The initial margin requirement was 75 percent and the maintenance margin was 30 percent. The interest rate on the margin loan was 8.5 percent. He received no dividend income. What was his holding period return? Multiple Choice 8.45 percent 9.88 percent 10.76 percent 7.05 percent 11.56 percent 2.   You purchased six put option contracts with a...
You purchased 200 shares of Frozen Foods stock for $42 a share eight months ago. Today,...
You purchased 200 shares of Frozen Foods stock for $42 a share eight months ago. Today, you received a dividend of $0.40 a share and also sold the shares for $46 each. What was your effective annualized rate of return on this investment?
3. You purchased 100 shares of JNJ stock at $50 per share. The stock is currently...
3. You purchased 100 shares of JNJ stock at $50 per share. The stock is currently selling at $45. You would like to lock up your total loss to no more than $700. Which of the following action will help you? OPTIONS; A. place a stop-buy order at $57 B. place a stop-loss order at $43 C. place a limit buy order at $53 D. place a limit sell order at $47 E. none of the above 4. Which of...
The prices of European call and put options on a non-dividend-paying stock with 12 months to...
The prices of European call and put options on a non-dividend-paying stock with 12 months to maturity, a strike price of $120, and an expiration date in 12 months are $25 and $5, respectively. The current stock price is $135. What is the implied risk-free rate? Draw a diagram showing the variation of an investor’s profit and loss with the terminal stock price for a portfolio consisting of One share and a short position in one call option Two shares...
You purchased a put with a strike price of $37.5 and an option premium of $0.45....
You purchased a put with a strike price of $37.5 and an option premium of $0.45. You simultaneously bought the stock at a price of $36 a share. What is your profit per share on these transactions if the stock price at expiration is $33.50?
You buy 300 shares of ABC stock at $53 per share. At the same time, you...
You buy 300 shares of ABC stock at $53 per share. At the same time, you write 300 call options on ABC stock with exercise price equal to $51 and call premium $6.92. Calculate your profit if ABC stock price at the expiration of the option is $48.06 per share. A. $594 B. -$594 C. -$1,482 D. $1,482 E. $692 You buy 320 call options with exercise price of $72 and call premium of $6.50. You write 640 call options...
The current price of a non-dividend-paying stock is $100. Over the next six months it is...
The current price of a non-dividend-paying stock is $100. Over the next six months it is expected to rise to $110 or fall to $90. Assume the risk-free rate is zero. An investor sells 6-month put options with a strike price of $102. Which of the following hedges the position? A. Short 0.6 shares for each put option sold B. Long 0.4 shares for each put option sold C. Short 0.4 shares for each put option sold D. Long 0.6...
Three months ago, you purchased 100 shares of stock on margin. The initial margin requirement on...
Three months ago, you purchased 100 shares of stock on margin. The initial margin requirement on your account is 70 percent and the maintenance margin is 40 percent. The call money rate is 4.2%/year and you pay 2.0% above that rate. The purchase price was $22 per share. Today, you sold these shares for $25.00 each. What is your annualized rate of return?
The current price of Stock A is $305/share. You believe that the price will change in...
The current price of Stock A is $305/share. You believe that the price will change in the near future, but your are not sure in which direction. To make a profit from the price change, you purchase ONE call option contract (each contract has 100 calls) and TWO put option contracts (each contract has 100 puts) at the same time. The call option and the put option have the same expiration date. The strike price of the call option is...
The current price of Stock A is $305/share. You believe that the price will change in...
The current price of Stock A is $305/share. You believe that the price will change in the near future, but your are not sure in which direction. To make a profit from the price change, you purchase ONE call option contract (each contract has 100 calls) and TWO put option contracts (each contract has 100 puts) at the same time. The call option and the put option have the same expiration date. The strike price of the call option is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT