Mr. Wa Is believes that ABC Co.’s stock price is going to decline from its current level of P82.50 sometime during the next 5 months. For P510.25 he could buy a 5-month put option giving him the right to sell 100 shares at a price of P83 per share. If he bought a 100 share contract for P510.25 and ABC Co.’s stock price actually dropped to P63, what would be his net profit (after transactions costs but before taxes)? A. P1,439.75 B. P1,489.75 C. P1,950.00 D. P2,000.00 E. P2,435.00
Mr. Wa Is believes that ABC Co.’s stock price is going to decline from its current level of P82.50 sometime during the next 5 months. For P510.25 he could buy a 5-month put option giving him the right to sell 100 shares at a price of P83 per share. If he bought a 100 share contract for P510.25 and ABC Co.’s stock price actually dropped to P63, what would be his net profit (after transactions costs but before taxes)? A. P1,439.75 B. P1,489.75 C. P1,950.00 D. P2,000.00 E. P2,435.00
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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Mr. Wa Is believes that ABC Co.’s stock price is going to decline from its current level of P82.50 sometime during the next 5 months. For P510.25 he could buy a 5-month put option giving him the right to sell 100 shares at a price of P83 per share. If he bought a 100 share contract for P510.25 and ABC Co.’s stock price actually dropped to P63, what would be his net profit (after transactions costs but before taxes)?
A. P1,439.75
B. P1,489.75
C. P1,950.00
D. P2,000.00
E. P2,435.00
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