Consider a stock in which the put, the call and the forward are provided. If the current price of the stock is 100 and the annual effective risk-free interest rate is 1%. Show the strategy that has the highest net premium. Assume that there are no transaction costs. Answer choices: a. Buy a six-month 105 put and sell a six-month 105 call. b. Sell a six-month 100 call and long a six-month 105 put. c. Sell a six-month forward. d. Buy a six month forward on the stock.

Answers

Answer 1

The best strategy that has the highest net premium is to-B.  Sell a six-month 100 call and long a six-month 105 put.

What is a forward contract?

A forward contract is a written agreement between two parties to purchase or sell a product or asset at a future date at a specified price. It's a binding contract in which the conditions, including the price, are set at the outset.

This implies that if the market fluctuates in one direction, one party benefits at the expense of the other. As a result, these contracts can be highly volatile.

They are usually only traded between professionals, rather than on a public exchange.

What is a put option?

A put option is a financial contract that gives the holder the right, but not the obligation, to sell an asset or underlying security at a specified price within a set time frame.

A call option is a financial contract that gives the holder the right, but not the obligation, to purchase an underlying asset at a specific price within a certain time frame.

Strategy for the highest net premium:

The most excellent strategy for the highest net premium is to sell a six-month 100 call and buy a six-month 105 put. This is a type of options strategy known as a long put spread, which is designed to profit from a drop in the underlying asset's price. With this strategy, you buy one put option while simultaneously selling another put option at a higher strike price. The net result is a credit, which is the difference between the premiums paid and received. It's referred to as a net premium.

Hence, option is b. is correct.

To know more  on Forward contract visit:

https://brainly.com/question/32568745

#SPJ11


Related Questions

Which of the following are laws which protect workers?

Answers

Answer:

The Equal Employment Opportunity Commission (EEOC) enforces federal laws prohibiting employment discrimination. These laws protect employees and job applicants against: Discrimination, harassment, and unfair treatment in the workplace by anyone because of: Race.

Explanation:

Who is most likely to threaten the security of a business?
A. Only employees
B. Outsiders who were once employees
C. Only outsiders
D. Both employees and outsiders

Answers

Answer:

B. Outsiders who were once employees.

A. Only employees. Why? Since they are closest to the organizational data and will have access as a result of their duties, employees pose the most threats.

Darin has clicked on the Outdoor Gear website. What should the marketing manager have already done to make sure the site works for Darin

Answers

The marketing manager can make the website work for Darin by;

Provide truly useful information.Keep Darin interested in Outdoor Gear's offerings.

What is a website?

A website is an online platform used to advertise a business, it a way to market the products of the company.

This can be helpful by providing the necessary information about the products on the website for consumers to see.

Learn more about website at;

https://brainly.com/question/25920220

a graph of a flexible budget formula reflects fixed costs of $40,000 per month and total costs of $84,000 at a volume of 4,000 units. assuming the relevant range is 1,000 to 20,000 units, the graph would reflect total monthly costs at 8,000 units of what dollar amount?

Answers

Variable costs are costs that vary in proportion to the volume of production or sales. The chart would represent a total monthly cost of 8,000 units at $120,000.

Variable costs are costs that vary with the amount of goods or services produced by the firm. Variable cost is the sum of the marginal cost of all units produced.

Given:

The cost of the line that would appear in the cost table would be:

$84,000 = $40,000 + x4,000

Where x is the variable unit cost.

To find the variable cost per unit, solve for x: x = $10 per unit.

total cost at 8000 units:

Y = $40,000 = $8,000 x $10 = $80,000

Y = $40,000 + 80,000

Y = $120,000

To know more about the Variable Cost,

brainly.com/question/26373444

#SPJ4

HELPPPP!!!! WILLL GIVE BRAINLEST!!!


It allows you to rent a car while yours is being repaired. a. auto replacement c. personal damage liability b. comprehensive physical damage d. rental reimbursement

Answers

Answer:

I'm pretty sure the answer is d

Explanation:

Alternatively, you may pay out-of-pocket for your rental then seek reimbursement from the other insurance company once it completes its investigation.

Answer:

D

Explanation:

Hasty Manufacturing orders 86,000 annually. They order 6 times a year. They hold 6,468 units in safety stock. The minimum number of units Hasty Manufacturing holds throughout the year is:__________

Answers

Answer:

6,468 units

Explanation:

Based on the information given we were told that the Manufacturing company orders 86,000 per year which they order 6 times a year which means that if the manufacturing company HOLD 6,468 units in safety stock. The MINIMUM number of units the Manufacturing company will HOLDS throughout the year is:6,468 units which was HOLD in Safety stock.

Think about where you will be in your career and your life five years into the future. Create a list of the jobs that you think you will have, the additional skills you might develop, and the further education you will pursue. Using this list, prepare a résumé for yourself that reflects where you believe you will be in five years. Once you have prepared the résumé, share it with someone in your family or with a close friend. Ask them for their insight as to whether the résumé is an accurate portrayal of where they think you will be in five years. If their opinion is different from yours, can you determine why? How might this information factor into your present and future career decision-making?

Answers

Explanation:

It is essential that when choosing the business administration course there is a directing of the student to one of the multiple administrative areas in which a career can be built.

Assuming that there is an interest in building a career with a focus on entrepreneurship in the market, it is necessary that there are significant skills for entrepreneurs, that is, communication skills, flexibility, and conceptual skills, which allow the administrator a broad view of the business, coordinating and controlling its resources to position itself favorably in the competitive market.

If your focus is to open a new business, it is necessary that you evaluate your profile, considering that this is an activity that requires resilience, organization, a lot of study and determination. When preparing your resume and asking for the opinion of people close to you, analyze if the characteristics of an entrepreneur will match yours, and adjust to develop them if necessary, seek support material, such as great scholars, scientific articles, try to observe the business scenario, and dedicate yourself to making your business prosper.

According to our system of checks and balances, what can the other branches of government do if the President vetoes a bill that Congress believes is necessary to protect the welfare of the people?
A. The Senate can overturn the veto with a two-thirds vote
B. Congress can overturn the veto with a two-thirds vote.
C. The Senate can overturn the veto with a three-fifths vote.
D. The Supreme Court can overturn the veto.
E. The Supreme Court can declare the bill unconstitutional.

Answers

Congress has the authority to override a veto with a two-thirds majority in both chambers, which results in the bill being printed and signed into law.

A veto can be overridden by the Congress with a two-thirds majority in both chambers, which causes the bill to be printed and signed into law. The President has two more options to select from. If Congress is in session and the President does not act within 10 days, the measure becomes a law. What grounds exist for the legislative branch to overturn a veto?  The bill is often returned back to the house where it was first introduced after a standard veto by the president, along with a note outlining the president's stance. This reinforces the American principle that everyone is subject to the law, including legislators.

Learn more about Congress here:

https://brainly.com/question/29996525

#SPJ4

If a country's birth rate is 15 per 1,000 population per year and the death rate is 10 per 1,000 population per year, what is
the annual population growth rate?
5 per 1,000
10 per 1000
15 per 1,000
25 per 1,000

Answers

5 per 1000 because 15-10 is five

indicate whether the following statement is true or false and why. a wage rising slower than the rate of inflation is actually falling.
True or False

Answers

The given statement, "wage rising slower than the rate of inflation is actually falling" is true because if wages are increasing slower than the average price of goods and services, purchasing power falls.

Purchasing power of money mean the financial ability to buy products and services.

When inflation occurs, the general price level of goods and services increases, meaning that the purchasing power of money decreases. If a worker's wage rises at a rate slower than the rate of inflation, their real income will be decreasing, as they can buy fewer goods and services than they could before. This means that, in real terms, their wage is actually falling.

To know more about inflation

https://brainly.com/question/29308595

#SPJ4

verify describe the distillation process of alcohol​

Answers

It’s a process that can be used to separate pure liquids from a mixture of liquids

Tickets to a fundraiser are $14 if purchased ahead of time and $25 if purchased at the door. The total amount raised from all ticket sales was $625. If eleven tickets were purchased at the door, how many tickets were purchased ahead of time?.

Answers

25 tickets

($14)(25)=$350
($25)(11)=$275
$350+$275= $625

Name the choreographic element that encourages dancers to rely on musical cues, visual connections, and emotional phrasing.

Answers

The choreographic element that encourages dancers to rely on musical cues, visual connections, and emotional phrasing includes the time, energy, and space

What is the meaning of Choreography?

In art, a choreography means the way in which an idea is expressed physically through dance. When developing this concept, the users usually relies on important principles of organization to ensure that the idea takes a clear, appropriate, and aesthetically pleasing form.

These are principles that comprises the basic ingredients for the dancers' movements and patterns and help the choreographer utilize space, express intention and the music, and organize the dancers.

Read more about Choreography

brainly.com/question/1384028

#SPJ1

Hi what color should I paint my room or should I just leave it white?

Answers

Answer: I would say light blue but it depends on what kind of theme you are going for in your room.

Also light blue with clouds is what I want to paint my walls so that is the first thing to come to my mind

Describe the population distribution in Guyana​

Answers

Statistics indicate that Guyana is one of the most lightly populated countries in Latin America and the Caribbean. The World Bank estimated that there were four people per square kilometer in Guyana in 1988, far fewer than the average of twenty people per square kilometer for all of Latin America. However, more than 90 percent of Guyana's population lived along the coast, on a strip constituting only 5 percent of the country's total land area. A more useful figure is the population density per square kilometer of agricultural land, which was estimated at forty-six in 1988. In Latin America as a whole, the average population density on agricultural land was fifty-five per square kilometer.

More than 70 percent of Guyana's coastal population is rural, living on plantations or in villages strung along the coastal road. The villages range in size from several hundred to several thousand inhabitants. The layout of the villages is dictated by the drainage and irrigation systems of the plantations, both active and abandoned. The villages are most heavily concentrated along the estuary of the Demerara River and the eastern environs of Georgetown, near the mouth of the Berbice River close to New Amsterdam, and along the extreme east coast near the Courantyne River.

The pattern of population distribution in Guyana is a product of nineteenth-century economic development, which was based on the cultivation of sugarcane. Because the swampy coast was fertile and sugar production was geared to export, the large sugar estates confined their operations to a narrow coastal strip. Most of the villages had ethnically diverse populations, but usually one ethnic group predominated. The urban population was predominantly African, but it would be misleading to suggest that all Afro-Guyanese were urban. Indeed, the majority of the Afro-Guyanese population was rural. A far greater majority of Indo-Guyanese, however, lived outside the cities. The interior of the country was left mainly to the Amerindians. Even the later exploitation of timber, bauxite, and manganese in the interior failed to effect any sizeable migration.

Reasons for looting ​

Answers

Answer:

if anyone do something wrong

Answer:

There are several reasons people loot, the most common being a retaliation against someone or something ( an anger towards a business or company ) and leads to plundering the goods of a store or shop. It's also a sad but common theme to loot after natural disasters, such as a hurricane or earthquake. Less common is looting in war, and the only reason it's less common is because fortunately we don't have any wars at the immediate moment

A grocer sells apples for $1.35 each, pears for $1.45 each and oranges for $1.60 each. she also offers a discount of 70c for anyone who buys two pieces of fruit, and a discount of $1.60 for anyone who buys three pieces of fruit. one day she sells 50 pieces of each type of fruit, for a total of $202. how many customers did she have, assuming each customer bought 1, 2 or 3 pieces of fruit?

Answers

The number of customers who bought 1, 2 or 3 pieces of fruit is 40.

What is customer?

Customer is a person or organization that buys services or goods from a business. Customers are the most important stakeholders for any business as they are the source of revenue for the business. Customers have certain expectations from the business such as quality products, competitive prices, friendly service and delivery of goods and services as promised. Businesses need to closely monitor customer feedback and reviews and take corrective action to ensure customer satisfaction. A good relationship with customers can create loyalty and repeat business for the company. Companies can use various strategies such as loyalty programs, discounts, etc. to build and maintain customer relationships.

She had 40 customers. Here is the mathamatical explanation:
Apples: 50 x $1.35 = $67.50
Pears: 50 x $1.45 = $72.50
Oranges: 50 x $1.60 = $80.00
Total: $220.00
Discounts: 40 x $0.70 = $28.00 & 10 x $1.60 = $16.00
Total Amount: $202.00
Therefore, the number of customers who bought 1, 2 or 3 pieces of fruit is 40.

To learn more about customer
https://brainly.com/question/24553900
#SPJ4

25 point multiple choice

Ava works in a college admissions office. She is involved in reading applications and matching students to the criteria set out by the school for acceptance. If Ava decides that the student qualifies to attend the college, she notifies them. Which pathway in the Education and Training Cluster does Ava’s career fall into?

A. Teaching and Training B. Administration and Administrative C. Professional Support Services D. Science & Mathematics

Answers

It will be Option C, " Professional support and Services ".

Proof:-

• She is only reading applications that might be related to complaints or admissions, So , Option A and D is incorrect.

• She is not in the field of anything related to teaching, therefore, Option B is also incorrect.

Now Option C is only remaining. Therefore, Option C is your answer.

Hope it helps you...

(Answered by Benjemin)

Your salary is one thing to consider when reviewing a job

offer but benefits are also important. Which of the

following would NOT be a part of your benefits package?

•Paid time off

•Healthcare insurance

•Disability Insurance

•Free technology equipment

Answers

Paid holidays, health insurance, life insurance, retirement benefits, gratuities, and other perks may be included in employee benefit packages. Benefits for employees don't take into account how well they perform.

What makes a decent benefits package?

Holidays, personal days, sick days, and other leave from work. contributions to retirement and pension are plans included in employee benefit packages . Employees' or their families' tuition aid or reimbursement. discounts on goods and services provided by the business; housing. 401(k) plan includes company match. Medical, dental, and vision insurance for workers with a variety of coverage/co-pay alternatives. Fitness centre or gym reimbursement of $100 per month. 10 paid vacation days each year.

To know more about employee benefit packages visit:

https://brainly.com/question/28260090

#SPJ1

What is the author's main claim or argument?
Pizza is the best

Answers

i hate pizza. it’s grosssdd

a corporate director or officer will not be liable to the corporation or to its shareholders for honest mistakes of judgment and bad business decisions made in good faith. group of answer choices true false

Answers

True. According to the business judgment rule, a corporate director or officer will not be held liable for honest mistakes of judgment or bad business decisions made in good faith.

This is because they are presumed to be acting in the best interest of the corporation and its shareholders, and should not be punished for decisions that were made in good faith. However, if there is evidence of fraud or misconduct, they may be held liable.

A corporate director or officer will not be liable to the corporation or its shareholders for honest mistakes of judgment and bad business decisions made in good faith. This is because they are protected by the Business Judgment Rule, which presumes that directors and officers act in the best interest of the corporation and its shareholders, even if the outcome is not favorable.

To know more about Corporate visit:-

https://brainly.com/question/29332045

#SPJ11

Grace feels she has been sexually harassed by Linda’s unkind comments. What should Grace do immediately? a. Contact the EEOC for help b. Tell a supervisor what Linda said c. Document what Linda said d. Tell Linda to stop Please select the best answer from the choices provided A B C D

Answers

Answer:

d. Tell Lynda to stop

Explanation:

Although there are several policies guiding sexual harassment whether in a work place or society at large, it is however important that Grace ask Lynda to stop immediately.

Verbal sexual abuse can be stopped before it degenerate to Wilder form. However, if the person is abusing the other verbally fails to stop, then the person being offended may report to the relevant authorities for necessary action.

Everyone has the right to a safe environment without being sexually abused. However, if that happens, that firm action of saying stop should be the first thing otherwise you report to the relevant authorities if it persist.

steps on how to create your own app​

Answers

Explanation:

● Steps on how to create your own app

First you have to know coding and programing...

#1 You are driving down the highway when one of your tires suddenly blows out. You should

Pump your brakes rapidly, and steer your vehicle to control any skids.

Avoid using your brakes. Slow down gradually and concentrate on steering.

Press hard on your brake pedal and stop as quickly as you can.

Answers

Avoid using your brakes. Slow down gradually and concentrate on steering

The monopolist produces an output that is __________ the perfectly competitive industry would produce.

Answers

Answer:

charge more than a firm in a competitive market. to to Monopoly Production:

1) The skills and knowledge a person has acquired through experience and/or
education.
O Human Capital
O Entrepreneurial talents
O Physical Capital
O Perfect competition

Answers

Answer:

O Human Capital

Explanation:

Human capital is an employee's knowledge, skills, and competencies that a company uses in productivity.  It is the attributes of labor that impact production and influence compensation. Human capital is enhanced through education, job training, work experiences, and research.

Human capital is compensated through wages and salaries. Its cost is monetized as labor and is one of the factors of production.

The Federal Reserve implemented a series of new policies and tools in response to the 2007-2008 financial crisis and recession. Many economists believe these policies helped avert another Great Depression, but exacerbated what problem in the financial system

Answers

Considering the situation described the many economists believe these policies helped avert another Great Depression but exacerbated the inflation problem in the financial system.

This is because the new policies and tools used to tackle the 2007-2008 financial crisis and recession was based on Keynesian economics.

However, while Keynesian economics concentrates on regulating aggregate demand to solve or prevent economic recessions, it is considered inflationary.

This is because it is believed that these policies encourage lower tax rates and increase the national deficit to ensure there is employment.

However, with more money in circulation, many economists believed it would cause inflation and more income disparity.

Hence, in this case, it is concluded that the correct answer is Inflation.

Learn more here: https://brainly.com/question/20036871

Sarah notices a sign in the window of a clothing store advertising a major sale on coats. realizing that she needs a new coat, sarah enters the store, chooses a coat that she feels represents good value for the price, and buys it. this stage in the exchange process is known as the _____.

Answers

Answer:

transaction

Explanation:

Transaction is the confirmation that an exchange has taken place. Before a transaction could be consumated, there must be at least two or more persons that are involved. Transaction means that a deal has been made such as receiving value for payment of product purchased.

With regards to the above, transaction is the right answer because after money has been exchanged with the products purchased, the confirmation that the exchange actually took place is transaction.

suppose a bank has $1,500,000 in deposits, a minimum reserve requirement of 20 percent, and total reserves of $350,000. then the bank has excess reserves of

Answers

A bank has $1,500,000 in deposits, a minimum reserve requirement of 20 percent, and total reserves of $350,000. then the bank has excess reserves of $50,000.

To calculate the excess reserves of the bank, we need to first determine the required reserves:

Required Reserves = Deposit x Reserve Requirement

Required Reserves = $1,500,000 x 0.20

Required Reserves = $300,000

Next, we can use the formula for excess reserves:

Excess Reserves = Total Reserves - Required Reserves

Excess Reserves = $350,000 - $300,000

Excess Reserves = $50,000

Therefore, the bank has excess reserves of $50,000. This means that the bank is holding more reserves than the minimum required by the Federal Reserve, which provides a cushion to cover unexpected withdrawals and allows the bank to make loans to customers.

Learn more about Federal reserves: https://brainly.com/question/382312

#SPJ11

Identify whether the income below would be considered earned income, passive income, or portfolio income. Mychal’s parents bought a house, fixed it up, and sold it at a higher price.

Answers

Answer: Portfolio income is money received from investments, dividends, interest, and capital gains. It is one of three categories of income.

Explanation:

Other Questions
the sun and the rest of the solar system formed about 5 billion years ago from a huge cloud of dust and gas called a . Suggest one thing he could do to the skin cells to make them easier to see. how to find the slope of a trendline in excel 2016 What is the tariff rate by Japan (in 2017) on the following item: Safety Seat Belts For Motor Vehicles: HS Code 870821 a) 0% b) 8% c) 2.5% d) 5% What is Home Economics? a new car purchased for $20.000 decreases by 10% each year. Write an exponential decaymodel for the car. Then determine how long it will take the value of the car to decrease to $7000. Once a person has been diagnosed with diabetes, what is the single greatest health threat they will face?A.arthritisB.cardiovascular diseaseC.obesityD.cancer Find AD.BA13x 4D8x + 11 What is the purpose of recrystallizing a solid organic substance you obtain following evaporation of an organic layer acquired from a separatory funnel Help me i got 15 mins.! which equation represents a proportional relationship A. y=4x B. 5x+2 C. y= 7 D. y= 3x At atmospheric pressures, water evaporates at 100C and its latent heat of vaporization is 40,140 kJ/kmol. Atomic weights: C-12; H-1and 0-16. QUESTION 4 (10 marks) A 2 m oxygen tent initially contains air at 20C and 1 atm (volume fraction of O, 0.21 and the rest N). At a time, t = 0 an enriched air mixture containing 0.35 O (in volume fraction) and the balanse N is fed to the tent at the same temperature and nearly the same pressure at a rate of 1 m/min, and gas is withdrawn from the tent at 20C and 1 atm at a molar flow rate equal to that of the feed gas. (a) Write a differential equation for oxygen concentration x(t) in the tent, assuming that the tent contents are perfectly mixed (so that the temperature, pressure, and composition of [5 marks] the contents are the same as those properties of the exit stream). (b) Integrate the equation to obtain an expression for x(t). How long will it take for the mole fraction of oxygen in the tent to reach 0.33? Find the perimeter of the polygon.106The perimeter of the polygon is17 A researcher studied the relationship between the number of times a certain species of cricket will chirp in one minute and temperature outside. Her data is expressed in the scatter plot and line of best fit below. What does the slope of the line represent?A) How long the cricket continues to chirpB) The expected temperature when the cricket chirps 1 timeC) The expected change in temperature in degrees Fahrenheit for each additional cricket chirp in one minuteD) The expected change in number of cricket chirps in one minute for each additional degree Fahrenheit The observation that the relative frequencies of melanic to light peppered moths changes with the color of tree bark provides support for ______. Which of the following about Treasury inflation protected securities is NOT true: O Treasury security that is indexed to inflation O Protect investors from the negative effects of inflation O Considered a low-risk investment O Traded in money market find the slop if the line through each pair of points (-13,1),(-16,1) Required information Exercise 4-47 and 4-48 (Static) (LO 4-4) [The following information applies to the questions displayed below.] Mels Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mels kitchen and adjoining meeting room operate at 70 percent of capacity. Mels purchases the cookies for $0.60 each but is considering making them instead. Mels can bake each cookie for $0.20 for materials, $0.15 for direct labor, and $0.45 for overhead without increasing its capacity. The $0.45 for overhead includes an allocation of $0.30 per cookie for fixed overhead. However, total fixed overhead for the company would not increase if Mels makes the cookies. Mel himself has come to you for advice. "It would cost me $0.80 to make the cookies, but only $0.60 to buy. Should I continue buying them?" Materials and labor are variable costs, but variable overhead would be only $0.15 per cookie. Two cookies are put into every lunch. Exercise 4-48 (Static) Make or Buy with Opportunity Costs (LO 4-4) Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from the dinners would amount to $3,000 annually. Required: a. If Mel decides to sell dinners, what are the total costs for both making and buying the cookies? b. Should Mel continue to buy the cookies? Yes No A service ticket by default lasts for how long? 1. Conrad spent $48 on art supplies. The canvas for each of his paintings is an additional $2. He plans to sell his paintings for $10. a. Write an equation that could be used to find the number of paintings (p) he will need to sell to break even. Thanks