At expiration the stock is at 54. determine the gain or, Ask an Expert

Finance

1) Compute the present price per share (P0) for Olson Corporation, provided the listed information. The data pertain to year just ended.

Sales=10,000units
Sales price per unit=$10
Variable cost per unit=$5
Fixed cost=$10,000
Long-term debt outstanding=$15,000
kd on all long-term debt=5%
Tax rate=30%
Common stock shares outstanding=10,000shares
Beta=1.5
kRF=5%
kM=9%
Dividend payout ratio=40%
Growth rate in earnings and dividends=7%

2) The investor is committed to buying 100 shares of world port management stock in 6 months. She is worried that stock price will rise appreciably over the next six months. Stock is at $45 and she purchases a six month call with a strike of $50. At expiration the stock is at $54. Determine the gain or loss on whole stock option portfolio?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M914550

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Why does the binomial option pricing formula discount the

Why does the binomial option pricing formula discount the expected cash flows using the risk-free rate?

Antiques r us is a mature manufacturing firm the company

Antiques R Us is a mature manufacturing firm. The company just paid a $9 dividend, but management expects to reduce the payout by 8 percent per year, indefinitely. If you require a 14 percent return on this stock, what w ...

Question - four days ago you entered into a futures

Question - Four days ago you entered into a futures contract to sell €125,000 at $1.41 per euro. The spot exchange rate when you entered the contract was $1.37. Your initial performance bond was $7,300 and your maintenan ...

What is venture capital and what types of firms receive

What is venture capital, and what types of firms receive it? What are some of the important services provided by underwriters? What type of underwriting is the most common in the United States, and how does it work? What ...

Cowcor copr currently has 76 million in debt outstanding

COWCOR COPR currently has $76 million in debt outstanding with a 6% interest rate. The terms of the loan require it to repay $19 million of the balance each year. Suppose the marginal corporate rate is 40% and that the i ...

You are a junior analyst and you have been asked to

You are a junior analyst and you have been asked to forecast sales for lululemon for 2012. At the end of 2011, lululemon operated 147 corporate stores in North America (42 in Canada and 105 in the US). Lululemon plans to ...

Dia lucrii inc has 325000 shares of cumulative preferred

Dia Lucrii, Inc. has 325,000 shares of cumulative preferred stock outstanding. The stock is supposed to pay $2.18 in dividends per share each quarter. Due to an unexpected event, the company has missed the last two quart ...

Question the cement cost index changed from 630 to 654 from

Question: The cement cost index changed from 630 to 654 from the end of 2014 to the end of 2015. You could buy 100 pallets of cement for $200,000 at the end of 2014. How much money did you have to put into an account gai ...

What is the fundamental difference between the factors that

What is the fundamental difference between the factors that make up the Task Environment (sometimes called the Micro-Marketing Environment) and the Broad Environment (sometimes called the Macro-Marketing Environment). Hi ...

What are the benefits of a country having a positive

What are the benefits of a country having a positive Current Account and what are the benefits of a country having a negative Current Account?

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert