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Ibnushuaibabutalhah
24.07.2020 •
Business
Ed Stall is an investor who owns 1 share of YY industries and a put option on 1 share of YY. The exercise price of the put option is $100 and YY currently trades at $99. The option premium was $3. If the price of YY at expiration is $50, the value of Stall's position is:
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Ответ:
$100
Explanation:
The reason is that the minimum value that the buyer of the put option will have is its exercise price because if I have right to sell an asset with exercise price of $100 and the market value of the underlying asset goes below $100 say $90, then I will prefer exercising the option and will receive $100. But suppose if the market price of the underlying asset goes above exercise price and is say $110 then I will benefit by selling the product in the market by receiving $110 not by exercising the put option and receiving $100.
So we can see from the above scenario, the minimum price that the put option holder can get by exercising the put option is its exercise price, hence $100 is the right answer.
Ответ:
2%
Explanation:
The Capital Asset Pricing Model (CAPM) can be used to calculate expected value as thus;
= Risk free rate + beta (Market return - risk free rate)
= 5% + (-0.3) (15% - 5%)
= 5% - 3%
= 2%