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
NemiM [27]
2 years ago
11

You just purchased a three-month BP call option (exercise price $75) and a three-month BP put option (exercise price $75). The c

all premium is $6 and the put premium is $2. Your maximum potential loss from this position is ______________. (Assume each contract is for 100 shares of stock) $200 $600 $800 unlimited
Business
1 answer:
enyata [817]2 years ago
3 0

Answer:

Correct option is C.

<u>Maximum potential loss from this position is $800</u>

Explanation:

Premium paid for call option = $6 * 100 = $600

Premium paid for put option = $2 * 100 = $200

Total cost = $600 + $200 = $800

In case the price of underlying stock falls below $75, call option will be exercised. If the price rises above $75 cal option would be, exercised. In case price stays at $75, nothing would be done. In any case the amount lost cannot exceed the cost of $800 that has been paid for the options.

You might be interested in
The inverse demand for a homogeneous-product Stackelberg duopoly is P = 16,000 - 4Q. The cost structures for the leader and the
Zigmanuir [339]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

6 0
2 years ago
Risks commonly considered to understand project financing are:
Alex17521 [72]

Construction and completion risk, political and regulatory risk and expropriation and nationalization Risk, and environmental risk.

7 0
2 years ago
Read 2 more answers
The five dollar Burger Joint gift card that your friend gave you for your birthday expires today. You can either use the gift ca
ruslelena [56]

Answer:

B) The value of the ingredients that go into the home-cooked meal and the value of a five-dollar dinner at Burger Joint .

Explanation:

Opportunity costs can be defined as the cost for choosing one alternative investment or action over another.

If you choose to use the five dollar gift card, you are going to eat for free, although you might not enjoy that meal as much as your delicious home made dinner.

But if you choose to eat a delicious meal at home, you are going to lose the five dollars of the give card and will have to spend a certain amount of money in making the dinner. Those same ingredients could be used to prepare dinner tomorrow. That is your opportunity cost of eating at home.

4 0
2 years ago
A new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of $5,000, and special
Marta_Voda [28]
<span>The machine would have a cost basis of $80,000 - $86,000. All business owners must gain profit from the products that they sell by ensuring that their capital will be returned to them. Putting such costing price gives the owner the capital gains as well as earning back the expenses that he has shelled out in order to purchase the machine to be sold in the market. <span>
</span></span>
8 0
2 years ago
Gabriella strongly prefers a specific brand of gourmet coffee. Since there is only one store in her area that sells her brand, s
omeli [17]

Answer:

A. True

Explanation:

For her it is a specialty good because it not sold everywhere, therefore she makes the extra effort.

7 0
2 years ago
Other questions:
  • When entrepreneurs develop new products,other companies also experience growth because they
    13·2 answers
  • In supplier selection, the main idea is to find the highest-quality materials available.
    10·1 answer
  • a courier picks up 1000 small unmarked bills, some $20 bills and some $50 bills. The total value is $41,000. How many of each bi
    10·1 answer
  • Suppose Hyperpolis’s GDP increases by 15%, and its inflation rate is 12%, while Superpolis’s GDP increases by 6%, and its inflat
    15·1 answer
  • The sensitivity of bank profits to changes in interest rates can be measured more directly using ▼ duration analysis credit rati
    10·2 answers
  • Your company relocated you from the United States to their United Kingdom office in London. You brought your personal computer w
    15·1 answer
  • Wu Production Company, which uses activity-based budgeting, is in the process of preparing a manufacturing overhead budget. Whic
    6·1 answer
  • On January 1, 20x1, the ABC Corporation purchased 80% of the XYZ Company's voting stock for $3,000,000. The FMV of all of XYZ's
    15·1 answer
  • George runs a small retail business. He sells brands that another business manufactures. George’s retail store uses the logos an
    5·1 answer
  • A census is a regularly-occurring and official count of a particular population. Census data available at the united states cens
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!