answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
elixir [45]
2 years ago
7

A trader creates a long butterfly spread from options with strike prices $60, $65, and $70 by trading a total of 400 options. Th

e options are worth $11, $14, and $18. What is the maximum net gain (after the cost of the options is taken into account)
Business
1 answer:
malfutka [58]2 years ago
3 0

Answer:

$400

Explanation:

From the question, there is a butterfly spread when a trader buys 100 options with strike prices $60 and $70 and sells 200 options with strike price $65.

The maximum gain is the point where both the stock price and the middle strike price are equal, i.e. equal to $65. At that point, the options payoffs are respectively $500, 0, and 0. By implication, the total payoff is $500.

The set up cost of the butterfly spread can be calculated as follows:

Setup cost = ($11×100) + ($18×100) – ($14×200)

                  = 1,100 + 1,800 – 2,800

Setup cost = $100

Net gain = Options payoffs – Setup cost = $500 - $100 = $400

Therefore, the maximum net gain (after the cost of the options is taken into account) is $400.

You might be interested in
Various financial data for SunPath Manufacturing for 2019 and 2020 follow. 2019 2020 Output: Sales $ 300,000 $ 330,000 Inputs: L
erik [133]

Answer:

22.20%

Explanation:

Energy Productivity Ratio 2019 = 300,000 / 10,000 = 30

Energy Productivity Ratio 2020 = 330,000 / 9,000 = 36.66

The percentage change = (36.66-30)/30 * 100

The percentage change = 0.222 * 100

The percentage change = 22.20%

So, the percentage change in the energy partial productivity measure for SunPath between 2019 and 2020 is 22.20%

3 0
2 years ago
One of the biggest challenges of business process design is​ ________.
Bogdan [553]
The biggest challenges of business process design are how a business could engage people from getting to work in a way of working new ways or techniques and even following procedures that are different and that they are not known to be of.
3 0
2 years ago
Mentally estimate the total cost of items that have the following prices: $1.85, $.98, $3.49, $9.78, and $6.18. Round off your a
Nonamiya [84]

Answer: Option (c) is correct.

Explanation:

Given that,

Round off the values of items to the nearest half dollar are as follows:

Item 1 = $2.00

Item 2 = $1.00

Item 3 = $3.50

Item 4 = $10.00

Item 5 = $6.00

Estimated total cost of items = Item 1 + Item 2 + Item 3 + Item 4 + Item 5

= $2.00 + $1.00 + $3.50 + $10.00 + $6.00

= $22.50

Hence, nearest value is $22.50.

Therefore, option (c) is correct.

8 0
2 years ago
Windsor Hospital purchases $90,000 in surgical equipment on October 1, Year 1. The useful life is estimated to be 5 years, and t
AVprozaik [17]

Answer:

The depreciation expense for year 1 is $16,000

Explanation:

Depreciation: The depreciation was occurred due to tear and wear, obsolesce, time period, etc

Under the straight-line method, the depreciation should be charged with the same amount over the useful life.

The calculation is shown below:

= \dfrac{(original\ cost - residual\ value)}{(useful \ life)}

= \dfrac{(\$90,000 - \$10,000)}{(5 \ years)}

= $16,000

The depreciation should be charged for $16,000 in year 1. Moreover, it is shown in the income statement in the debit side and in the cash flow statement also.

5 0
2 years ago
Gina Robinson, Inc. (GRI) GRI management has decided to reinvent the culture of the organization. Previously, the company tried
Nuetrik [128]

Answer:

C) Telecommuting

Explanation:

Telecommuting simply means working from your home. The internet changed our lives completely, and it is also how we work. Everyday more people are starting to work from distant locations to their "main office". This means that they can be working at their house using a computer which is connected to the company's intranet.

Some of the advantages of telecommuting is that it increases efficiency by decreasing costs (you don't have to spend time going to work and you can have your office at home), reducing employee churn rate, allowing older or disabled people to work, it is good for your health, and around 65% of telecommuters in the US have have increased their work efficiency vs. their normal office work.

7 0
2 years ago
Other questions:
  • Which of the following is a start-up expense for Maria's food truck?
    15·1 answer
  • Which reference source may be consulted to answer questions regarding the professional engineers act?
    5·1 answer
  • KFC in Japan altered the sweetness of its coleslaw to appeal to Japanese tastes. This is an example of which type of global mark
    13·1 answer
  • Which career pathway requires that employees have stamina, stress-management skills, confidence, persuasiveness, and specialized
    5·1 answer
  • White Company has two departments, Cutting and Finishing.
    10·1 answer
  • Candice is a jewelry shop owner, specializing in beaded necklaces. For each of the following inputs, classify each item as a var
    14·1 answer
  • .
    10·1 answer
  • The management of Bonga Corporation is considering dropping product D74F. Data from the company's accounting system for this pro
    8·1 answer
  • Barry, a solvent individual but a recovering alcoholic, embezzled $6,000 from his employer. In the same year that he embezzled t
    14·1 answer
  • Mojo Mining has a bond outstanding that sells for $2,201 and matures in 21 years. The bond pays semiannual coupons and has a cou
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!