Use the following quotes for Target stock options:TickerBidTGT 3/18/22 C200 20.15TGT 3/18/22 C210 13.45TGT 3/18/22 C2208.35TGT 3/18/22 C2304.85TGT 3/18/22 C240 2.70TickerTGT 3/18/22 P200TGT 3/18/22 P210TGT 3/18/22 P220TGT 3/18/22 P230TGT 3/18/22 P240Source: Bloomberg Finance L.P.Bid5.00Ask5.158.30 8.5012.85 13.4519.15 19.8026.05 27.80Ask21.6013.808.655.152.95CallsIVMLast29.00y 35.0714.25 32.589.65 31.345.10 31.072.85 31.08Return on investment at $205Return on investment at $255PutsLastIVM34.1632.3512.55 31.3418.49 30.0625.83 28.444.958.35Volume16203516Assume you purchased the right to sell 2,000 shares of Target stock in March 2022 at a strike price of $230 per share. SupposeTarget stock sells for $205 per share immediately before your options' expiration. What is the rate of return on your investment? Whatis your rate of return if the stock sells for $255 per share (think about it)? Assume your holding period for this investment is exactlythree months.%%Volume1838695Note: A negaive value should be indicated by a minus sign. Do not round intermediate calculations. Enter your 3-month returns asa percent rounded to 2 decimal places.

Here,StrikePrice of Put is $230Premium on Put at $230 is $19.80Number of Shares is 2,000

Use the following quotes for Target stock options: Ticker Bid TGT 3/18/22 C200 20.15 TGT 3/18/22 C210 13.45 TGT 3/18/22 C220 TGT 3/18/22 C230 TGT 3/18/22 C240 8.35 4.85 2.70 Ask 21.60 13.80 8.65 5.15 2.95 Calls Last IVM 29.00y 35.07 14.25 32.58 9.65 31.34 5.10 31.07 2.85 31.08 Puts Ticker Bid Ask TGT 3/18/22 P200 5.00 5.15 TGT 3/18/22 P210 8.30 8.50 TGT 3/18/22 P220 12.85 13.45 TGT 3/18/22 P230 19.15 18.49 19.80 26.05 27.80 25.83 28.44 TGT 3/18/22 P240 Source: Bloomberg Finance L.P. Return on investment at $205 Return on investment at $255 Last 4.95 8.35 12.55 IVM 34.16 32.35 31.34 30.06 Volume 6056 % % 16 20 35 16 Volume 18 38 6 Assume you purchased the right to sell 2,000 shares of Target stock in March 2022 at a strike price of $230 per share. Suppose Target stock sells for $205 per share immediately before your options' expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $255 per share (think about it)? Assume your holding period for this investment is exactly three months. 9 5 Note: A negaive value should be indicated by a minus sign. Do not round intermediate calculations. Enter your 3-month returns as a percent rounded to 2 decimal places.

Use the following quotes for Target stock options: Ticker Bid TGT 3/18/22 C200 20.15 TGT 3/18/22 C210 13.45 TGT 3/18/22 C220 TGT 3/18/22 C230 TGT 3/18/22 C240 8.35 4.85 2.70 Ask 21.60 13.80 8.65 5.15 2.95 Calls Last IVM 29.00y 35.07 14.25 32.58 9.65 31.34 5.10 31.07 2.85 31.08 Puts Ticker Bid Ask TGT 3/18/22 P200 5.00 5.15 TGT 3/18/22 P210 8.30 8.50 TGT 3/18/22 P220 12.85 13.45 TGT 3/18/22 P230 19.15 18.49 19.80 26.05 27.80 25.83 28.44 TGT 3/18/22 P240 Source: Bloomberg Finance L.P. Return on investment at $205 Return on investment at $255 Last 4.95 8.35 12.55 IVM 34.16 32.35 31.34 30.06 Volume 6056 % % 16 20 35 16 Volume 18 38 6 Assume you purchased the right to sell 2,000 shares of Target stock in March 2022 at a strike price of $230 per share. Suppose Target stock sells for $205 per share immediately before your options' expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $255 per share (think about it)? Assume your holding period for this investment is exactly three months. 9 5 Note: A negaive value should be indicated by a minus sign. Do not round intermediate calculations. Enter your 3-month returns as a percent rounded to 2 decimal places.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Use the following quotes for Target stock options: Ticker TGT 3/18/22 C200 TGT 3/18/22 C210 TGT 3/18/22 C220 TGT 3/18/22 C230 TGT 3/18/22 C240 Ticker TGT 3/18/22 P200 TGT 3/18/22 P210 TGT 3/18/22 P220 TGT 3/18/22 P230 TGT 3/18/22 P240 Source: Bloomberg Finance L.P. Bid 20.15 13.45 8.35 4.85 2.70 Bid 5.00 8.30 12.85 19.15 26.05 Ask 21.60 13.80 8.65 5.15 2.95 Ask 5.15 8.50 13.45 19.80 27.80 Return on investment at $203 Return on investment at $217 Calls Last IVM 29.00y 35.07 14.25 32.58 9.65 31.34 5.10 31.07 2.85 31.08 Puts Last 4.95 8.35 12.55 18.49 25.83 IVM 34.16 32.35 31.34 30.06 28.44 Volume 16 20 35 16 Assume you purchased the right to sell 2,000 shares of Target stock in February 2022 at a strike price of $210 per share. Suppose Target stock sells for $203 per share immediately before your options' expiration. What is the rate of return on your investment? What is your rate of return if the stock sells for $217 per share (think about it)? Assume your holding period for this…
Use the following quotes for Target stock options: Ticker TGT 3/18/22 C200 TGT 3/18/22 C210 TGT 3/18/22 C220 TGT 3/18/22 C230 TGT 3/18/22 C240 Ticker TGT 3/18/22 P200 TGT 3/18/22 P210 TGT 3/18/22 P220 TGT 3/18/22 P230 TGT 3/18/22 P240 Source: Bloomberg Finance L.P. Bid Ask 20.15 21.60 13.45 13.80 8.35 8.65 4.85 5.15 2.70 2.95 Total cost Bid Ask 5.00 5.15 8.30 8.50 12.85 13.45 19.15 19.80 26.05 27.80 Calls Last 29.00y 14.25 9.65 5.10 2.85 Puts Last 4.95 8.35 12.55 18.49 25.83 IVM 35.07 32.58 31.34 31.07 31.08 IVM 34.16 32.35 31.34 30.06 28.44 Volume 16 20 35 16 Volume 18 38 6 9 5 If you wanted to purchase the right to sell 4,000 shares of Target stock in March 2022 at a strike price of $210 per share, how much would this cost you? Note: Do not round intermediate calculations. Round your answer to the nearest whole number.
Use the following quotes for Target stock options: Calls Last 29.00y 14.25 9.65 5.10 2.85 Ticker TGT 3/18/22 C200 TGT 3/18/22 C210 TGT 3/18/22 C220 TGT 3/18/22 C230 TGT 3/18/22 C240 Ticker TGT 3/18/22 P200 TGT 3/18/22 P210 TGT 3/18/22 P220 TGT 3/18/22 P230 TGT 3/18/22 P240 Source: Bloomberg Finance L.P. Total cost Bid 20.15 13.45 $ 8.35 4.85 2.70 Bid 5.00 8.30 12.85 19.15 26.05 Ask 21.60 13.80 8.65 5.15 2.95 249 Ask 5.15 8.50 13.45 19.80 27.80 Puts Last 4.95 8.35 12.55 18.49 25.83 IVM Volume 35.07 32.58 31.34 31.07 31.08 IVM 34.16 32.35 31.34 30.06 28.44 16 20 35 16 If you wanted to purchase the right to sell 3,000 shares of Target stock in March 2022 at a strike price of $210 per share, how much would this cost you? Note: Do not round intermediate calculations. Round your answer to the nearest whole number. Volume 18 38 6 9 5
Assume the stock’s future prices of stock A and stock B as the following distribution State Future Price Stock A Future price Stock B 1 $10 $7 2 $8 $9 If the time 1 price of stock A is $6, and the time 1 price of stock B is $5. And C1 represents the time 1 price of claim on state 1, C2 represents the time 1 price of claim on state 2 Use the information about stock prices and payoffs to Find the time 1 price C1 and C2. Find the risk–free rate of return, obtained in this market.
Assume the stock's future prices of stock A and stock B as following distribution State Future Price Stock A Future price Stock B $10 $7 $8 $9 If the time 1 price of stock A is $6, and the time 1 price of stock B is $5. And C and C2 represents the time 1 price of ciaim on state 1, C, represents the time 1 prices of unit claims on states 1 and 2. Use the information about stock prices and payoffs to • Find the time 1 prices C, and C2. • Find the risk - free rate of return, obtained in this market
financial advisor evaluates four stocks for inclusion in an investor's portfolio. A orrelation matrix showing each stock's correlation with the other stocks is shown below Stock ALK CMN BTY DLE ALK 0.40 0.58 1.00 -0.25 BTY 0.40 1.00 0.16 -0.04 CMN -.25 .16 1.00 .37 DLE .58 .04 .37 1.00 f the goal is to reduce the investor's overall portfolio risk, which two stocks should the advisor recommend? a. ALK and DLE b. ALK and CMN c. BTY and DLE BTY and CM
Consider the following options on stock X: Option Delta Gamma Vega A 0.5 2.2 1.8 В 0.8 0.6 0.2 C -0.40 1.3 0.7 D 0.70 1.8 1.4 A bank is long 1000 units of Option A, short 200 units of Option B, short 2000 units of Option C, and short 500 units of Option D. The following two options are also available in the market: Option Delta Gamma Vega E 0.6 1.5 0.8 F 0.1 0.5 0.6 a) Design one strategy that would make the bank's portfolio delta neutral. b) Design one strategy that would make the bank's portfolio delta and gamma neutral. Explain why this strategy provides a better hedge with respect to changes in the price of stock X than the strategy you constructed in part (a). c) Design one strategy that would make the bank's portfolio delta, gamma, and vega neutral.
Of the following four call options that can be purchased on a stock, which would you expect to have the lowest price? A. September call; $85 exercise price B. September call; $80 exercise price C. December call; $85 exercise price D. December call; $80 exercise price
Suppose you want to price an American style put option for a stock being traded on theKuispad Stock Exchange having the following parameters: s = 18, t = 0.25, K = 20, σ = 0.2, r = 0.07. Using n = 5, calculate the value of V0(0). Provide all necessary details
19. Which is the correct bar chart if the stock's opening price is P15, closing price is P25, highest price is P30, and lowest price is P10? a. d.
See the following binomial tree. Yellow (top) for stock price, green (middle) for European put option premium, and blue for American put option premium (bottom). 0.78 0.04365 0.04507 0.87547 0.0134 0.0134 0.69494 0.07508 0.07795 0.98263 0 0.78 0.02716 0.02716 0.61915 0.12503 0.13085 1.10291 0 0 0.87547 0 0 0.69494 0.05506 0.05506 0.55163 0.19837 0.19837 At what time, American put should be exercised? O A. When stock price is 0.78, as it is the first time that American value is greater than European value. OB. Anytime that American value is greater than European value. O C. When stock price is 0.61915, as it is the latest time American value is greater than European value. OD. When exercising instant payoff St-K is greater than the present value of American future payoff if keeping it alive.
The following limit orders for the XYZ stock have been submitted to the opening auction at the LSE: XYZ Limit Order Book Price Buys 21 20.875 20.75 20.625 20.50 20.375 20.25 20.125 20 10 15 20 10 5 10 What is the market clearing price? O A. some other price OB. 20.50 OC. 20.25 OD. 20.375 OE. 20.125 Sells 20 5 5 5 10 20 30

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