Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem 1: prepare brief notes on:

a) Speculator.
b) Arbitrager.
c) Hedgers.

problem 2: Describe various types of orders and different types of margin.

problem 3: A call option with a strike price of $50 costs $2. A put option with a strike price of $45 costs $3. Describe how strangle can be made from such two options. What the pattern of profits is from strangled?

problem 4: Assume that put options on a stock with strike prices $30 and $35 cost $4 and $7, correspondingly. How can the options be used to create:

a) A bull spread and
b) A bear spread

Construct a table which shows the profit and payoff for both spreads.

problem 5: A call with a strike price of $60 costs $6. A put with the same strike price and expiration date costs $4. Construct a table which shows the profit from a straddle. For what range of stock prices would the straddle lead to a loss?

problem 6: An investor enters into two long futures contracts on frozen orange juice. Each contract is for the delivery of 15,000 pounds. The present futures price is 160 cents per pound, the initial margin is $6,000 per contract and the maintenance margin is $4,500 per contract. What price change would lead to a margin call? Under what conditions $2,000 could be withdrawn from the margin account?

problem 7: Assume that the current spot price of gold is S = $350 per oz, the risk-free three-month rate of interest is 3% and there are no costs of holding gold. Determine the three-month forward price of gold?

problem 8: The forward price of wheat for delivery in three months is $3.90 per bushel, while the spot price is $3.60. The three-month interest rate in continuously compounded terms is 8% per annum. Is there an arbitrage opportunity in this market if wheat might be stored costless?

problem 9: Assume that the current price of gold is $365 per oz and that gold might be stored costless. Also assume that the term structure is ?at with a continuously compounded rate of interest of 6% for all maturities.

a) Compute the forward price of gold for delivery in three months.
b) Now assume that it costs $1 per oz per month to store gold (payable monthly in advance). Determine the new forward price?
c) Suppose storage costs are as in part (b). If the forward price is given to be $385 per oz, describe whether there is an arbitrage opportunity and how to exploit it.

problem 10: What is the price of a European call option on a non-dividend-paying stock when the stock price is $52, the strike price is $50, the risk-free interest rate is 12% per annum, the volatility is 30% per annum and the time to maturity is three months?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M92845

Have any Question? 


Related Questions in Basic Finance

1 explain how the publication financial analysis of the

1. Explain how the publication Financial Analysis of the Motor Carrier Industry could be used to determine the percentage of total revenue a firm has in relation to similar trucking firms. 2. Annual reports that insuranc ...

The frequency range for a telephone is between 500 hz and

The frequency range for a telephone is between 500 Hz and 4000 Hz. Why does a telephone not do a very good job of transmitting music?

Black hill inc sells 100 million worth of 27-year to

Black hill inc. sells $100 million worth of 27-year to maturity 10.81% annual coupon bonds. the net proceeds (proceeds after flotation costs) are $975 for each $1000 bond. What is the before tax cost of capital for this ...

1 what are four primary reasons that behavioral researchers

1. What are four primary reasons that behavioral researchers use case studies? 2. What is a psychobiography? 3. Why are behavioral scientists reluctant to trust case studies as a means of testing hypotheses?

Ims limited issues a partly convertible debenture for 1000

IMS Limited issues a partly convertible debenture for 1000, carrying an interest rate of 10 percent. 360 will get compulsorily converted into two equity shares of IMS Limited a year from now. The expected price per share ...

1 what is the goal of a media partnership2 name and

1. What is the goal of a media partnership? 2. Name and describe six basic emergency management audiences. 3. What three factors do DHS and its state and local partners need to address to improve its communications with ...

1 how has the community development block grant served to

1. How has the Community Development Block Grant served to help communities perform local mitigation? 2. Why do some people consider insurance to not be a proper mitigation method? 3. Why are structural controls a contro ...

Future value of annuity twins jessica and joshua both 25

Future Value of Annuity. Twins Jessica and Joshua, both 25, graduated from college and began working in the family restaurant business. The first year, Jessica began putting $2,000 per year in an individual retirement ac ...

Analyze print communication-find an example of print

Analyze print communication:- Find an example of print communication, for example, a flyer on campus, a newsletter, or a magazine ad. With a partner, discuss why the creator of the message may have chosen a print medium. ...

Objective use a trial balancerefer to mcallen incs trial

Objective : Use a trial balance. Refer to McAllen, Inc.'s trial balance in Short Exercise. The purpose of this exercise is to help you learn how to correct three common accounting errors. Error 1. Slide. Suppose the tria ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen