University | University of London (UOL) |
Subject | DSM080: Financial Markets |
DSM080: Financial Markets, Assignment, UOL, Singapore: The share price of a certain stock today is $42.50, and five-month European style call options with a strike price of $45 currently sell for $4.25.
Question 3
The share price of a certain stock today is $42.50, and five-month European style call options with a strike price of $45 currently sell for $4.25. A client who feels that the share price is going up is trying to decide between buying 100 shares of the stock or buying 1,000 call options. Both strategies involve an initial investment of $4,250.
(a) What happens to each of these investments if the share price remains at
$42.50 after five months?
(b) What happens if the share price rises from $42.50 to $55 over the five month period?
(c) How high does the share price have to rise for the option strategy to be the
more profitable of the two alternatives
Stuck with a lot of homework assignments and feeling stressed ? Take professional academic assistance & Get 100% Plagiarism free papers
Tags:-
- Go Business offers PSG solutions for enterprises in Singapore: Collective Intelligence and Entrepreneurship, Assignment 1, JCU, Singapore
- Design an ontology based on- Accidents can be categorised as chemical, electrical, fire, kinetic or liquid: Collective Intelligence and Entrepreneurship, Assignment 1, JCU, Singapore
- Project Control Monitoring, Assignment, HU, Singapore: Deliberate Project MONITORING AND CONTROL or PMC Identification
- DSM500: Final Project Report, Coursework 2, UOL, Singapore
- DSM080: Financial Markets, Assignment, UOL, Singapore: A grapefruit juice futures contract is for 15,000 pounds of frozen grapefruit juice
- DSM080: Financial Markets, Assignment, UOL, Singapore: A trader who is working in the gold markets is able to borrow money at the interest rate of 7% per annum
- DSM080 Financial Markets, Assignment, UOL, Singapore: A dollar-based American corporation has decided that it will have to pay 6 million UK pounds in three months
- Principle of Finance Assignment, UCD, Singapore: National Gaming Inc. (National) operates the weekly lottery in the country
- DSM060: Data Science Research Topics, Course Work Assignment, UOL, Singapore
- E2409C: Aviation, Assignment, RP, Singapore : Aircraft and Flight Operations
UP TO 15 % DISCOUNT