An investor owns 5,000 shares of IBM stock, $105 per share. He thinks that there is no large rise and possible drop in price. This investor decides to sell 50 December 110 call option at $4, receiving $20,000. Note: Each call option contract provides for the right to buy 100 shares of stock. December 110 call option means that the strike price of the call is 110 and it matures in December.
Required:
1. If IBM stock price rises from $105 to $112, the profit associated with the passive strategy is __________ and the profit associated with the covered call writing strategy is ____________.
Answers
Answer:
If IBM stock price rises from $105 to $112, the profit associated with the passive strategy is $ 35,000 and the profit associated with the covered call writing strategy is $ 45,000 .
Explanation:
Shares = 5000
Price of shares = $105
Sell Price = $112
The profit associated with the passive strategy = $(112 - 105) × 5000
= $ 35,000
Now with covered call also included in the strategy the profit/loss from covered call can be calculated as
Strike Price = $110
Spot Price = $112
Total Shares on which Call options are sold = 50 × 100 = $5000
Total Premium received = 5000 × 4 = $20000
(Spot Price - Strike Price ) × Total Shares
= $(112 - 110) × 5000
= $10,000
Hence Net Profit = Premium received - $10,000 = $20,000 - $10,000
= $ 10000
Hence the profit associated with the covered call writing strategy
= $35,000 + $10,000
= $ 45,000
Related Questions
suon
Select the best answer for the question
7. The company's goal is to earn $5 profit for every sale that's made in its stores. Which key performance indicator can be used to measure the results of this goal?
OA. Number of sales per employee
OB. Profit made per sale
OC. Overall company growth
OD. Number of sales per day
Answers
You would see the profits by sale and try to increase it to $5 therefore option B is correct.
Hope this helps have a excellent day!
The law in your state allows an employer to create an
enforceable agreement that restricts an employee's
postemployment activities as long as the restriction is
reasonable in terms of purpose, geographic area, and
duration. Your employer is a dominant force in the
technology industry, an industry that is ever changing at
a rapid pace. As a result, top employees want the flex-
ibility to move from company to company. Of course,
having and keeping top employees is a competitive
advantage. Assume that you are an executive charged
with determining whether your firm will embrace a
postemployment restriction within its contracts of
employment. If you adopt a justice theory approach,
what result might you adopt, and why? If you adopt a
utilitarianism approach, what result might you adopt,
and why?
Answers
Utilitarian theory respects all persons equally without particular regard and assists people in making moral decisions. The utilitarian theory provides a basic technique. According to utilitarian philosophy, humans value all moral terms such as self-sacrifice, justice, and honesty.
There are various philosophies of justice, including utilitarianism, justice as fairness, and libertarianism. Utilitarians were those who supported utilitarian doctrine. With utilitarian theory being one of the theories of justice, the researcher was compelled to investigate how the theory provides justice to people, how it impacts human behaviour, and the issues the theory faces in the present world. Act utilitarians argue that their theory gives compelling grounds to reject many conventional moral statements and substitute them with moral perspectives based on the consequences of actions. People who are persuaded by act utilitarianism's critics may decide to abandon utilitarianism outright and adopt another form of moral theory.
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Linda and Chris are purchasing their first home. Which of the following charges will appear as a debit to them on the settlement statement?
Answers
As Linda and Chris are purchasing their first home, the charges that will appear as a debit to them on the settlement statement is real estate and agent sales commission.
What does settlement statement mean in contract?A settlement statement is a document that summarizes the terms and conditions of a settlement agreement reached between two or more parties. A settlement statement, which is commonly used for loan agreements, details the terms and conditions of the loan as well as all costs owed by or credits due to the buyer or seller.
It also specifies any fees that a borrower must pay in addition to the interest on a loan. Settlement statement documentation requirements vary depending on the type of loan. Mortgage loan settlement statements, which are used in real estate transactions, are also known as closing statements.
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A corporation issued 6,200 shares of $10 par value common stock in exchange for some land with a market value of $94,000. The entry to record this exchange is:
Answers
Answer:
Debit Land $94,000; credit Common Stock $62,000; credit Paid-In Capital in Excess of Par Value, Common Stock $32,000
Explanation:
Preparation of what The entry to record this exchange is:
Debit Land $94,000
Credit Common Stock $62,000
(6,200*$10)
Credit Paid-In Capital in Excess of Par Value, Common Stock $32,000
($94,000-$62,000)
(To record exchange)
After graduating from college, Joseph Tantillo decided to start a retail Web site that specializes in personalized Greek apparel. To fund his Web site, he borrowed money from his parents (who expect to be repaid with interest). In other words, he used _____ financing.
Answers
Answer:
Debt financing
Explanation:
Debt financing is defined as borrowing that a company undertakes to finance it's operations by selling of debt instruments to investors.
The debt instrument attracts interest payment.
Examples of debt financing includes bank loans, loans from friends and family, and government backed loans.
In the given scenario Joseph Tantillo decided to borrow money from his parents to start a retail Web site that specializes in personalized Greek apparel. This is debt financing
In contrast equity financing involves sale of shares to obtain capital
Are the following statements true or false?
(a) Perfect competition has an identical good.
(b) A monopolistically competitive firm makes zero economic profit in the long run.
(c) The defining feature of oligopoly is a large number of firms.
(d) A natural monopoly arises because of the existence of economies of scale.
Answers
(a) The given statement, "Perfect competition has an identical good" is true.
(b) The given statement, "A monopolistically competitive firm makes zero economic profit in the long run" is false.
(c) The given statement, "The defining feature of oligopoly is a large number of firms" is false.
(d) The given statement, "The defining feature of oligopoly is a large number of firms" is true.
(a) In perfect competition, all firms produce identical goods, which means that consumers cannot differentiate between them based on the product. Therefore, firms have to compete based on price and quality of their product.
(b) In monopolistic competition, firms can earn economic profit in the short run but may not be able to sustain it in the long run. This is because other firms can enter the market and offer similar products, which reduces the demand for the original firm's product and lowers its price, eventually resulting in zero economic profit.
(c) The defining feature of oligopoly is a small number of large firms that dominate the market. These firms have significant market power and can influence the market's price and quantity. Oligopolies can lead to collusion between firms, creating barriers to entry and limiting competition.
(d) A natural monopoly arises when a single firm can produce the entire output of the market at a lower cost than any combination of two or more smaller firms. This is due to economies of scale, where the average cost of producing a good decreases as the quantity produced increases.
Therefore, it is more efficient to have one firm producing the entire output rather than multiple smaller firms. However, natural monopolies can lead to market failure, and regulation may be necessary to prevent abuse of market power.
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1. Which of categories are Internal controls are grouped?
A. Effective operations, financial reporting, and compliance.
B. Efficient operations, financial analysis, and compliance.
C. Efficient operations, financial analysis, and management reporting.
D. Production and operations, financial reporting, and management reporting
Answers
Answer: A. Effective operations, financial reporting, and compliance.
Explanation:
Internal controls are meant to promote the effectiveness of operations in a company so as to bring about maximum profitability.
Internal controls also fall under financial reporting because they are sometimes done to ensure that the information presented by a company is accurate and complete.
There are compliance controls as well to ensure that the company is complying with the various regulations that apply to them be it federal, state, local or private.
Unearned revenues refer to a(n): Group of answer choices Asset that will be used over time. Expense incurred because a customer has paid in advance. Liability that is settled in the future when a company delivers its products or services. Increase in revenues as a result of delivering products or services to a customer. Decrease in an asset.
Answers
Answer:
Liability that is settled in the future when a company delivers its products or services.
Explanation:
Unearned revenue is money received for a service that is yet to be provided or a product that is yet to be delivered.
Unearned revenue is recorded as a liability on the balance sheet. The reason for this is because unearned revenue represents debts owed.
Once the service is rendered, the unearned revenue is recorded on the income statement as a revenue.
Example of unearned revenue : a company offers a one year subscription to consumers. The company is earning revenue for services that is yet to be rendered
what types of political, economic, and competitive challenges does MTV networks international face by operating worldwide?
Answers
Explanation:
Remember, MTV is a cable TV company initially founded in the United States.
Political challenges:
There may be differences in administrative costs in each country of operations. For example, the manner and value of taxes paid in the USA may be different in another country like France.
Economic challenges:
The level of economic growth may affect the amount and number of people who spend on entertainment leading to a decline in revenue and an increased need for aggressive marketing campaigns.
Competitive challenges:
Each country may already have other cable TV companies that a percent of the market share and so this it becomes a challenge to compete with these domestic companies.
Some of the challenges faced by MTV include:
Political:
Some countries may ban MTV for showing music that is against national valuesThere are countries that may take issue with the message of the songs that MTV plays and so they will take action to limit MTV exposure in their countries.
Economic:
Some countries might be unable to afford the fees of the international carriers of MTVCarriers in other nations charge cable fees to show MTV to their people and these people might be unable to pay for these fees depending on their economic development.
Competitive:
Some countries might already have established channels that showcase local music or some countries might just prefer local musicThere may already be local channels that show local songs or the locals may not be too impressed with the songs on MTV as they prefer their own. This would lead to less viewership for MTV.
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Which of the examples provides the best evidence that inflation has occurred?
a. A person whose salary has decreased is able to purchase more goods and services.
b. A person whose salary has increased is able to purchase fewer goods and services.
c. A person whose salary has increased is able to purchase more goods and services.
d. A person whose salary has remained the same
Answers
Option b; A person whose salary has increased is able to purchase fewer goods and services is best evidence that inflation has occurred.
A sustained increase in the general price level of goods and services is referred to as deflation, which is the opposite of inflation in economics. When the general price index level increases, each unit of currency buys fewer goods and services; as a result, inflation corresponds to a decrease in the purchasing power of money. The annualized percentage change in a general price index, or inflation rate, is a commonly used indicator of inflation. Because not all prices rise at the same rate, the consumer price index (CPI) is frequently employed. In the US, wages are also calculated using the employment cost index.
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Which of the following best describes what happens if one more unit of labor is used? Choose 1 answer:
A) MPL increases
B) MPL equals total product of labor (TPL)
C) APL is maximized
D) APL increases.
E) MPL is minimized
Answers
MPL increases, best describes what happens if one more unit of labor is used. Thus, option (a) is correct.
The change in output brought on by adding a new unit of labour is known as the marginal product of labour (MPL).
MPL stands for the extra output that can be produced with an additional unit of labour. If MPL rises, it indicates that the extra output produced by the additional unit of labour is larger than the output produced by the original unit of labour.
Therefore, option (a) is correct.
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Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations:
Service Departments Operating Departments
Administration Janitorial Groceries Gifts
Departmental costs before allocations $200,000 Â Â Â Â Â $50,000 Â Â Â Â $3,850,000 Â Â $330,000 Â Â Â
Employee-hours         470           330            2,720           150   Â
Space occupied square feet         900            1,100           9,100         900 Â
Required:
Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of space occupied.
Answers
Answer:
Madison Park Co-op
Allocation of Departmental Costs:
Service Departments Operating Departments
Administration Janitorial Groceries Gifts
Departmental costs
before allocations $200,000 $50,000 $3,850,000 $330,000
Administration -200,000 206,250 1,700,000 93,750
Janitorial -256,250 242,857 13,393
Total costs 0 0 $5,792,857 $437,143
Explanation:
a) Data and Calculations:
Service Departments Operating Departments
Administration Janitorial Groceries Gifts
Departmental costs
before allocations $200,000 $50,000 $3,850,000 $330,000
Employee-hours 470 330 2,720 150
Space occupied
square feet 900 1,100 9,100 900
Administration costs:
Janitorial = $200,000 * 330/3,200 = $206,250
Groceries = $200,000 * 2,720/3,200 = $1,700,000
Gifts = $200,000 * 150/3,200 = $93,750
Janitorial costs:
Groceries = $256,250 * 2,720/2,870 = $242,857
Gifts = $256,250 * 150/2,870 = $13,393
A business's revenue exceeds its expenses by $2,000 per month. However, its fixed expenses just increased by $3,500 per month. If this continues and the business has $18,000 in cash, in how many months will it run out of cash?
a) 12
b) 15
c) 20
d) 24
Answers
Answer:
a) 12
Explanation:
If the revenue exceeds the expenses by $2,000 per month this means that they are in profit $2,000 every month. Now the expenses increased by $3,500 so we need to subtract the $2,000 from this to calculate by how much expenses are exceeding profit.
$3,500 - $2,000 = $1,500
Now we can see that they need to pay $1,500 in expenses every month. Since they have $18,000 in cash we can divide this by 1,500 to calculate how many months they will be able to pay the expenses before they run out of cash.
18,000 / 1,500 = 12 months
What is an organization that uses resources to produce a product which
then sells called?
household
competition
private property
Answers
Answer:
A business or firm is an organization that uses resources to produce a product which it then sells.
You chose to upgrade the inventory management system. While this is definitely an important need, it doesn't impact customers shopping experiences directly, and the number of customer complaints continues to pile up. Next, you need to select an ERP provider that includes an inventory management, as well as other features such as pos that you will need to address down the road. The ERP you choose needs to meet all of your needs so that the different facets of the systems integrate smoothly. The number of ERP providers is overwhelming. Each seems to offer similar services and tools. You decide to focus on one indicator that will help you differentiate between the options. What factor do you prioritize? O Price O Level of support included
Answers
To integrate the ERP that will meet my all need, I will focus on those ERPs that has included support. The level of support would be a top priority and then the price will be the second priority when choosing the ERP.
To upgrade the inventory management system, with the ERP that will help in solving customer complaints. I will choose only that ERP which provides support. This support may be linked with ERP functionality, technical support, or customization according to our needs. When choosing the ERP for the organization, the level of support should be the top priority and price would be the second priority.
ERP is a type of software system that enables firms to automate, manage, and coordinate business activities to achieve the best performance. It can integrate a company's financials, operations, supply chain, commerce, manufacturing, reporting, and human resources function onto a single platform.
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A brand promise is the overlap between what a company does best and what customers _______. Fill in the blank
Answers
The brand promise is the overlap between what a company does best and what customers expect from them. It represents the unique value proposition that a company offers to its customers, which helps to build trust and loyalty with them.
A brand promise is the statement or commitment made by a company to its customers, which reflects what the company does best and what customers expect from them. It is the foundation of the brand and helps to build trust and loyalty with customers. The brand promise represents the unique value proposition that a company offers to its customers, which differentiates it from its competitors. The blank space in the question refers to what customers want or need from the company. Customers expect companies to deliver on their promises, provide high-quality products or services, and create positive experiences that meet their expectations. Therefore, the brand promise should align with the needs, wants, and expectations of the target audience. To create a strong brand promise, companies need to understand their customers' needs and wants, and also assess their strengths and weaknesses. By doing so, they can develop a promise that meets customer expectations and aligns with their core competencies. This will create a unique selling proposition that will differentiate them from competitors and build long-term relationships with customers. In summary, the brand promise is the overlap between what a company does best and what customers expect from them. It represents the unique value proposition that a company offers to its customers, which helps to build trust and loyalty with them. By creating a strong brand promise, companies can differentiate themselves from competitors and build long-term relationships with their customers.
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1. When distribution team members use replenishment reports to retrieve quantities of items to be sent to stores they are:
O A. Mixing
O B. Sending
O C.Packing
O D. Picking
Answers
Answer:
D. Picking.................
Distribution team members use replenishment reports to retrieve quantities of items to be sent to stores, this is called as Picking. Hence, Option D is the correct statement.
What is the picking system?Systems for picking orders from warehouses are created to improve picking operations' effectiveness, speed, and accuracy. A few of these systems can be used by businesses to improve order fulfillment processes in their distribution channels.
Hence, Distribution team members use replenishment reports to retrieve quantities of items to be sent to stores, this is called as Picking. Option D is the correct statement.
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The Help Corporation makes a tax-deductible donation to the local food bank whereas the Starlight Foundation gives funds on a regular basis to a local homeless shelter. What is the difference between these two types of giving?
Answers
The difference between these two types of giving is the Starlight Foundation practices philanthropy while the Help Corporation practices cause marketing.
What is philanthropy and marketing?A philanthropy means an act of cheerful giving to needy while marketing pursues an organizational goals.
In conclusion, the difference between these two types of giving is the Starlight Foundation practices philanthropy while the Help Corporation practices cause marketing.
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What is a bushiness opportunity?
Answers
Answer: You said it yourself, an opportunity.
Explanation:
A business opportunity is often used to describe a way for a business to make more money. It can also mean many other things such as hiring more employees, creating more roles, partnering with another company, etcetera.
But mainly used to make more money.PLEASE HELP What platforms do digital media campaigns use to reach customers?
Question 1 options:
Websites
Social Media
Live Chats
All of the Above
Answers
Assume that the relationship between test scores and the student-teacher ratio can be modeled as a linear function with an intercept of 698.9 and a slope of (-2.28). A decrease in the student teacher ratio by 2 will:A) reduce test scores by 2.28 on averageB) result in a test score of 698.9C) reduce test scores by 2.56 on averageD) reduce test scores by 4.56 for every school district
Answers
Answer:
The correct option is D) reduce test scores by 4.56 for every school district.
Explanation:
Based on the information in the question, the relationship between test scores and the student-teacher ratio can be mathematically written as follows:
x = 698.9 - 2.28y .................... (1)
Where,
x = test scores
y = student-teacher ratio
The a slope of (-2.28) indicates the amount by which x will change whenever there is a change in y.
Therefore, when there is a decrease in the student teacher ratio by 2 (i.e. y = 2), we will have:
Change in x = -2.28 * 2 = -4.56
The negative sign therefore indicate that the test scores will reduce by 4.56 for every school district. Therefore, the correct option is D) reduce test scores by 4.56 for every school district.
Identify the South African barriers to entry market share
Answers
Barriers to entry in South Africa include:
High startup costsLimited access to financingWhat are some barriers to entry ?Some industries in South Africa entail expensive start-up costs like procurement of equipment, infrastructure development or acquiring licenses which can be limiting for new entrants.
Several startups may encounter challenges in obtaining financial aid due to limited capital availability or stringent borrowing rules as well as exorbitant interest charges. The regulatory framework within the country is multifaceted and applies robust controls across a multitude of sectors that may be restrictive for businesses trying to establish themselves.
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Select the statement that demonstrate a characteristic of a leader
Answers
The statement that demonstrate the characteristic of a leader is: Establishing and retaining your company's competitive advantage depends on experimentation. Great leaders are aware of this and promote innovation and risk-taking within their company.
What is a leader?
Being leader is the ability to execute strategic objectives, align people's individual and collective goals, and continuously refresh an organisation are all examples of leadership behaviours. The quality of leader involves directing and influencing outcomes and empowering groups of individuals to collaborate in order to achieve goals that they couldn't achieve on their own.
A leader also does not fear in taking risks and doing experiments for achieving his goals.
Therefore, Experimentation is essential for a Leader to establishing and maintaining your company's competitive advantage. Knowing this, great leaders encourage risk-taking and innovation within their organisations.
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Which bank deals with short term of credit A. Agricultural bank B. Comersial bank C. Industrial Bank D. None of these
Answers
Answer:
B) commercial bank
Explanation:
i hope it helps you :)
1. A formal report that shows what an individual owns, what an individual owes, and the difference between the two.
Answers
Answer:
A net worth statement
Explanation:
A net worth statement is a financial report/ document that shows the assets and liabilities - both short and long-term - of an individual or company. The net worth is the result of deducting liabilities from assets.
The net worth statement paints a picture of a person or an entity's current financial position. Assets represent what a person owns, while liabilities are what they owe.
"Group decision making is better". Do you agree or disagree with the statement? Give 3 reasons why do you say so?
Answers
Answer:
I agree because it make the group bring out more ideals
sometimes group decision make some people to voice out their problems
group decision help organization and firms to operate in good aims
An investment will pay you $24,000 in 7 years. The appropriate discount rate is 6 percent compounded daily. What is the present value
Answers
Answer:
$15,769.67
Explanation:
The formula for determining present value is
FV x (1 + r/m)^-mn = P
FV = Future value
P = Present value = $24,000
R = interest rate = 6%
N = number of years = 7
m = number of compounding = 365
$24,000 x ( 1 + 0.06/365)^-365 x 7 = $15,769.67
construct a quadriteral PQRS, given that QR=4.5cm PS=5.5cm,RScm5cm and diagonalPR=5.5cmand diagonal SQ=7cm
Answers
Answer:
The quadrilateral is drawn above
Alfred E. Old and Beulah A. Crane, each age 42, married on September 7,2017. Alfred and Beulah will file a joint return for 2019. Alfred's Social Security number is 111-11-1109. Beulah's Social Security number is 123-45-6780, and she adopted "Old" as her married name. They live at 211 Brickstone Drive, Atlanta, GA 30304. Alfred was divorce from Sarah Old in March 2016. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah's death, whichever occurs first. Alfred pays Sarah $15,000 in 2019. In addition, in January 2019, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years' income taxes. Sarah's Social Security number is 123-45-6788. Alfred's salary for 2019 is $150,000. He is an executive working for Cherry.Inc. (Federal I.D. No. 98-7654321). As part of his compensation package, Cherry provides him with group term life insurance equal to twice his annual salary. His employer withheld $24,900 for Federal income taxes and $8,000 for state income taxes. The proper amounts were withheld for FICA taxes. Beulah recently graduated from law school and is employed by Legal Aid Society.Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives salary of $42,000 in 2019. Her employer withheld $7,500 for Federal income taxes and $2,400 for state income taxes. The proper amounts were withheld for FICA taxes. Alfred and Beulah had interest income of $500. They received $1,900 refund on their 2018 state income taxes. They claimed the standard deduction on their 2018 Federal income tax return. Alfred and Beulah pay $4,500 interest and $1,450 property taxes on their personal residence in 2019. Their charitable contributions total $2,400 (all to their church). They paid sales taxes of $1,400, for which they maintain the receipts. Alfred and Beulah have never owned or used any virtual currency, and they do not want to contribute to the Presidential Election Campaign. Compute the Old's net tax payable (or refund due) for 2019. Suggested software: ProConnect Tax Online
Answers
To compute the Olds' net tax payable (or refund due) for 2019, we need to gather all the relevant information and calculate their taxable income, apply the appropriate tax rates, deductions, and credits. Since the tax calculation involves various factors and tax laws, it would be best to use tax software such as ProConnect Tax Online or consult with a tax professional. The software will streamline the process and ensure accurate calculations based on the specific tax laws and regulations applicable to the Olds' situation.
roles performed by
managers
Answers
Answer:
honesty, truth, trustworthy, kind, believe, self-respect
Explanation:
Al of these are the quality of a manager
Answer:
Managing the business and making sure that everything works smoothly and efficiently.