Delta of a call option is 0.85. Stock price is currently $50. How much money do you need to borrow to hedge a short position in 200 call contracts (each contract is for 100 shares of stock), provided that you finance the hedge entirely with borrowed funds

Answers

Answer 1

Answer:

$850,000

Explanation:

Call contracts*Call option*Share of stock*Stock price

= 200*0.85*100*50

= $850,000

Thus, we need to borrow $850,000


Related Questions

Critically examine the maximax criteria for decision making under uncertainty
         ​

Answers

Explanation:

A decision under uncertainty is when there are many unknowns and no possibility of knowing what could occur in the future to alter the outcome of a decision.

Economies of scale occur when a firm's long-run average total cost curve is ___________________. a. upward sloping.b. vertical.c. downward sloping.d. horizontal.

Answers

Answer:

The correct answer is the option C: Downward sloping.

Explanation:

To begin with, the concept known as "Economies of Scale" is a vary famously term in the microeconomics theory due to the fact that it refers to the particular situation that a company achieves when their costs are at the lowest possible point in the long run becuase of the great volumen in production that the organization is starting to handle so that means that the more they start to produce the less the amount that the company will have to spend in the costs. Therefore that the curve in the graphic will be downward sloping due to the decrease of the prices in the costs implicating the amount that the company is handling.

Suppose an increase in the demand for dollars has caused an appreciation of the dollar. According to the purchasing power parity theorem, the value of the dollar in the future will:

Answers

Answer:

Appreciate more

Explanation:

Suppose an increase in the demand for dollars has caused an appreciation of the dollar. According to the purchasing power parity theorem, the value of the dollar in the future will appreciate more. This is because the shift in demand and supply will cause an increase in the value of the dollar. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

Monopolistic competition is defined by product differentiation .explain

Answers

Explanation:

Product differentiation is the means used by a firm in a monopolistic competitive market with many firms selling similar products to differentiate its product from that of other firms

Answer:

In Monopolistic Competition, a buyer can get a specific type of product only from one producer. In other words, there is product differentiation. The firms have to incur selling expenses since there is product differentiation. There is a large number of sellers with inter-dependent demand and supply conditions

Explanation:

A stock has a beta of 1.2. Suppose the expected market risk premium (EMRP) is 6% and the risk-free rate is 1%. What is this stock's expected return according to the CAPM

Answers

Answer:

7%

CAPM = 1% + [6% - 1%](1.2) = 1% + 6% = 7%

TIME REMAINING
29:35
What gives the US government the power to collect taxes?

the Constitution
laws passed by Congress
an executive order
common law

Answers

Answer:

The Constitution

Explanation:

In the United States, Article I, Section 8 of the Constitution gives Congress the power to "lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States. This is also referred to as the "Taxing and Spending Clause."

Draw a correctly labeled loanable funds graph that shows what happens to real interest rates for each of the following situations: (You will have 3 graphs)
The government borrows money to fund a war.
Private investors become more optimistic about the economy.
The government raises personal income taxes (do not consider the change in consumer saving).
In the text box provided, enter the time and date you sent your graphs to your instructor. Please specify if you e-mailed or faxed the graph. Make sure your name and the assignment number are on your paper and that each graph is clearly marked with an a, b, or c. (30 points)

Answers

Answer:

1. a) War increases demand for loanable funds, demand curve shifts RIGHT. (Increase in real interest rate)

b) Private investors are optimistic about the economy (i.e. investment opportunities). Demand for loanable funds increases, demand curve shifts RIGHT. (Increase in real interest rate)

c) Tax increase means a decrease in the supply about loanable funds. Supply curve shifts LEFT. (Increase in real interest rate)

2. would most likely increase the supply of loanable funds. If Americans are saving more, then they are spending less money and investing more of it. Remember--saving does not mean "not using it". It means investing it instead of consuming.

3. The interest rate will fall. There is a surplus of loanable funds and the real interest rate will reflect this surplus by falling.

4. decrease in the demand for loanable funds. When output decreases, the return on investment for new projects decreases and investors are less in need of money to fund their ventures.

5. decrease the supply for loanable funds. If they are consuming more, they are saving less.

6. Increase / Decrease. When interest rates increase, growth is reduced because funding economic ventures is now more costly. Sometimes the fed will increase interest rates when it anticipates inflation to increase in order to mitigate economic growth.

Hope this was helpful!

Explanation:

pencer Co. has a $300 petty cash fund. At the end of the first month the accumulated receipts represent 553 for delivery expenses, $167 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $58. The journal entry to record the reimbursement of the account includes a:_________.a) Debit to Petty Cash for $300. b) Debit to Cash Over and Short for $58 c) Credit to Cash for $242 d) Credit to Inventory for $167e) Credit to Cash Over and Short for $58.

Answers

Answer:

c) Credit to Cash for $242

Explanation:

Petty cash, beginning = $300

Delivery expense = $53

Merchandise inventory = $167

Miscellaneous expense = $22

Petty cash, Ending = $58

The journal to record the reimbursement of the accounts will be:

Event    Account Title and Explanation   Debit    Credit

1           Delivery expense                            $53  

           Merchandise inventory                   $167  

           Miscellaneous expense                  $22

                    Cash                                                   $242

Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%

Answers

Answer:

the real rate of return is 2.88%

Explanation:

The computation of the real rate of return is shown below:

As we know that

Real rate of return is

= {(1 + nominal rate of return) ÷ (1 - inflation rate)} - 1

= {(1 + 0.07) ÷ (1 + 0.04)} - 1

= 2.88%

Hence, the real rate of return is 2.88%

We simply applied the above formula so that the correct value could come

And, the same is to be considered  

A few years ago the British government was considering​ retiring, or buying back from​ investors, some outstanding consols that had annual coupons of . A consol​ is:______

a. a coupon bond that pays a variable coupon rate and does not mature.
b. a coupon bond that pays a fixed coupon rate and has a fixed maturity date.
c. a coupon bond that pays a variable coupon and has a fixed maturity date.
d. a coupon bond that pays a fixed coupon rate and does not mature.

If the yield to maturity on other​ long-term British government bonds was 2.0​%, the price the British government is likely to offer investors is ​£ _________

Answers

Answer: d. coupon bond that pays a fixed coupon rate and does not mature.

$3250

Explanation:

A consol is a coupon bond that pays a fixed coupon rate and does not mature. Consols are consolidated annuities that are perpetual. A steady amount of interest is paid for a consol even though they're not redeemable

Price of a consol will be gotten as fixed coupon amount divided by the rate of return. Let's assume that the fixed coupon amount is $65, then the price will be:

= 65/2%

= $3250

A stock has an expected return of 13.4 percent, the risk-free rate is 9 percent, and the market risk premium is 10 percent. What must the beta of this stock be?

Answers

Answer: 0.44

Explanation:

From the question, we are informed that a stock has an expected return of 13.4 percent, the risk-free rate is 9 percent, and the market risk premium is 10 percent.

The beta of this stock be calculated as:

= (13.4% - 9%) / 10%

= 4.4% / 10%

= 0.044 / 0.10

= 0.44

Therefore, the beta of the stock is 0.44

A college education fund is to be accumulated by twenty level semi-annual deposits, the first due on Jan. 1, 2011. The fund is to provide sixteen quarterly withdrawals of $1000 each, the first due on Oct 1, 2020. The nominal annual rate of interest is 10% convertible semi-annually. What is the amount of each deposit?

Answers

Answer:

$395.74

Explanation:

the college fund requires 20 equal semiannual payments starting January 1, 2011 and the last one should be made on July 1, 2020.

first we must determine the effective rate of the fund:

effective rate = (1 + 10%/2)² - 1 = 10.25%

now we must determine the quarterly rate:

quarterly rate = (1 + r)¹/⁴ - 1 = 2.47%

the present value of the annuity:

PV = distribution x annuity factor

distribution = $1,000PV annuity factor, 2.47%, 16 periods = 13.08553

PV = $1,000 x 13.08553 = $13,085.53

that means that by July 1, 2020, you need to have $13,085.53 in your college fund

FV of an annuity = contribution x annuity factor

FV = $13,085.53FV annuity factor, 5%, 20 periods = 33.066

contribution = FV / annuity factor = $13,085.53 / 33.066 = $395.74

An investor can invest money with a particular bank and earn a stated interest rate of 8.80%; however, interest will be compounded quarterly. What are the nominal (or stated), periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate 8.80% Periodic rate 6.12% Effective annual rate 9.00%

Answers

Answer:

nominal interest rate = 8.8%

periodic interest rate = 2.2%

the effective interest rate = 9.09%

Explanation:

nominal interest rate is the rate given to the investor = 8.8%

periodic interest rate = nominal interest rate / total number of compounding periods per year = 8.8% / 4 = 2.2%

the effective interest rate = (1 + periodic interest rate)ⁿ - 1 = (1 + 8.8%/4)⁴ - 1 = (1 + 8.8%/4)⁴ - 1 = (1 + 2.2%)⁴ - 1 = 1.0909 - 1 = 0.0909 = 9.09%

Alma Corp. issues 2,480 shares of $8 par common stock at $16 per share. When the transaction is recorded, credit(s) are made to a.Common Stock $19,840 and Retained Earnings $19,840. b.Common Stock $19,840 and Paid-in Capital in Excess of Stated Value $19,840. c.Common Stock $39,680. d.Common Stock $19,840 and Paid-in Capital in Excess of Par Value $19,840.

Answers

Answer:

b. Common Stock $19,840 and Paid-in Capital in Excess of Stated Value $19,840.

Explanation:

                                         Journal Entry

Particulars                                           Debit             Credit

Cash ($16*2,480)                                $39680

Common stock (2,480 *$8)                                         $19,840

Paid in capital in excess of par value (2,480 *$8)      $19,840

Bravo's complete assets and liabilities are Accounts Receivable $800, Equipment $10,000, Accounts Payable $4,200, Prepaid Rent $2,000, Supplies $400, Bank Loan $1,600, and Tools $300. Bravo's total assets are:_____.a. $11,100.b. $13,500.c. $11,500.d. $13,100.e. none of these.

Answers

Answer:

b $13,500

Explanation:

Assets are items that are used by a business organization for positive economic value .

Given that;

Accounts receivable = $800

Equipment = $10,000

Accounts payable = $4,200

Prepaid rent = $2,000

Supplies = $400

Bank loan = $1,600

Tools = $300

Total assets = Accounts receivable + Equipment + Prepaid rent + Supplies + Tools

Total assets = $800 + $10,000 + $2,000 + $400 + $300

Total assets = $13,500

Therefore, Bravo's total assets is $13,500.

An operator trainee is attempting to monitor a filling process that has an overall average of 705 cc. The average range is 17 cc. If you use a sample size of 6, what are the upper and lower control limits for an R-chart?

Answers

Answer and Explanation:

The computation of the upper and lower control limits for R-chart is shown below:

Upper Control limit of [tex]\bar x[/tex] chart is

[tex]\bar x[/tex] + A2 × [tex]\bar R[/tex]

=705 + 0.483 × 17

=713.21

Lower Control Limit Of [tex]\bar x[/tex] Chart is

[tex]\bar x[/tex]- A2 × [tex]\bar R[/tex]

= 705 - 0.483 × 17

= 696.789

The A2 value could be taken from the X bar and R bar chart having a sample size of 6

Now  

Upper control limit of R Chart

= D4 ×  [tex]\bar R[/tex]

= 2.004 × 17

= 34.068

And,

Lower limit of R chart

=  D3 × [tex]\bar R[/tex]

= 0.076  × 17

= 1.292

The D3 value is not available for the sample size 6 so we took the values of sample size 6

Also the D3, D4, and A2 could be taken from X bar tables and the range chart

In order to maximize profit, this perfectly competitive firm should produce:________.a. 30 units of output. b. 60 units of output. c. 50 units of output. d. 40 units of output.

Answers

Answer:

Perfect Competition meaning & equilibrium condition. Explanation of various cases when Q can be either options.

Explanation:

Perfect Competition market is a market with many buyers & sellers, selling homogeneous products, at identical prices.

Perfect competition firm is at equilibrium, when : Marginal Revenue (MR), ie same as Price (P) = Marginal Cost (MC)

Suppose TC = 100 + Q^2 , P = 60

Then MC =  2Q . Equalising MC & P, Q = 60 / 2 = 30

Suppose TC = 100 + Q^2 , P = 80

Then MC = 2Q. Equalising MC & P , Q = 80/2 = 40

Suppose TC = 100 + Q^2 , P = 100

Then MC  = 2.  Equalising MC & P, Q = 100/2 = 50

Suppose TC = 100 + Q^2 , P = 120

Then MC = 2Q. Equalising MC & P, Q = 120 / 2 = 60

An increase in a firm's tax rate will__________ if the firm has debt capital in its capital structure:

a. increase both the cost of preferred stock and debt.
b. decrease the cost of preferred stock.
c. increase the firm's WACC.
d. decrease the firm's WACC.

Answers

Answer:

d. decrease the firm's WACC.

Explanation:

As per WACC formula

WACC = ( Weight of Common Equity x Cost of Common Equity ) + ( Weight of Common Debt x Cost of Common Debt x ( 1 - Tax rate ) ) + ( Weight of Preferred Equity x Cost of Preferred Equity )

By assuming the values to prove the answer

Weights

Common equity = 55%

Preferred Equity = 15%

Debt = 30%

Costs

Common equity = 15%

Preferred Equity = 8%

Debt = 12%

Tax rate is 15%

Placing values in the formula

WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 15% ) ) + ( 15% x 8% )

WACC = 8.25% + 3.06% + 1.2% = 12.51%

Keeping others values constant, Now increase the Tax rate to 25% and placing vlaues in the formula

WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 25% ) ) + ( 15% x 8% )

WACC = 8.25% + 2.7 + 1.2% = 12.15%

Hence the WACC is decreased from 12.51% to 12.15% when the tax rate is increased from 15% to 25% keeping other values constant.

State the 5 most important banking services and rank them in order that you feel most important.

Answers

Answer:

checking account, savings acc, debit and credit cards, insurance , wealth management

Explanation:

The most important banking services can be as follows:

Account openingCheck issuing facilityLoan facilityIssuing credit or debit cardsInsurance assistance

What is a bank?

The bank is a financial authority that is accountable to the account holders who have opened their accounts in their bank.

Banks provide various types of services which are described as follows:

Banks allowed every individual of a country to open their respective accounts in any bank as per their income source.Banks provided the account holders the permit to issue a check in respect of any transaction in his/her name.They are given loans to the holder at a certain interest rate in accordance with the amount held in their bank accounts.They offer credit or debit cards for making cashless transactions or buying something expensive product in installments.They also provide insurance facilities in collaboration with the insurance company for a time span of some years.

Therefore, the service being provided by banks are explained as above.

Learn more about the banking system in the related link:

https://brainly.com/question/15062008

#SPJ2

If a competitive firm can sell a bushel of soybeans for $25 and it has an average variable cost of $24 per bushel and the marginal cost is $26 per bushel, the firm should:_______

Answers

Answer: reduce output.

Explanation:

In a competitive market, firms do not have control over the price that they sell their goods in the market but they do have control over their costs. It is recommended to produce/ sell goods at a quantity where Marginal Revenue will equal Marginal cost (MR = MC).

In a Competitive Market, Price is the same as Marginal revenue which means that Marginal revenue here is $25 and the Marginal Cost is $26. At this quantity of output, the Marginal Cost is larger than the Marginal revenue.

Company should therefore reduce output to a quantity where Marginal Cost will equal Marginal revenue.

Fitch Ratings a credit rating agency, recently downgraded Vermont's debt rating from AAA to AA, citing the state's economy and changing demographics This change could supood:________.a. Increase the direct costs of the state's debt. b. Increase private investment c. Cause the vote to invest in more securities d. None of these likely to occur

Answers

Answer:

a. Increase the direct costs of the state's debt.

Explanation:

When a bond's rating is downgraded is a signal to the investors that investing in the bond now is riskier than it was prior to the rating downgrade, hence, a perceived higher risk using the risk/return relationship means that the bond issue would have to offer a higher return to entice the investors to invest in the bonds.

As a result, the higher required rate of return translates into a higher direct cost of the state's debt since their interest rate offered has increased

Donnegan Company reported operating expenses of $325,000 for 2020. The following data were extracted from the company’s financial records: 12/31/19 12/31/20 Prepaid Expenses $ 60,000 $69,000 Accrued Expenses 210,000 255,000 Accounts Payable 300,000 350,000 On a statement of cash flows for 2020, using the direct method, cash payments for operating expenses should be:___________.

Answers

Answer:

cash payments for operating expenses should be $329,000

Explanation:

Cash Payments for operating expenses is included in the Cash Flow from Operating Activity Section of the Statement of Cash Flows when the Direct Method of preparing this statement is selected.

This is calculated as follows :

Cash Payments for operating expenses

Operating expenses                                                               $325,000

Adjustment of changes in Working Capital

Increase in Prepaid Expenses ($69,000 - $ 60,000)              $9,000

Increase in Accrued Expenses ($255,000 - $210,000)        $45,000

Increase in Accounts Payable ($350,000 - $300,000)       ($50,000)

Cash payments for operating expenses                              $329,000

When you add additional forms to a project, you add additional ________, which are stored in their own files.

Answers

classes


hope this helps

Agency employees interact with Taco Bell employees across job types because they need knowledge about the products and plans, increasing their:________

a. boundary spanning.
b. hierarchical sensitivity.
c. decision informity.
d. staff validity.
e. task validity.

Answers

Answer:

c. decision informity.

Explanation:

Since in the question it is mentioned that there is a interaction of Agency employees with the employees of Taco bell for different types of job as they need the knowledge regarding the product and plans that increased the decision informity

As if you have great knowledge and information so you are able to take the right decision i.e. ultimately good for a company

Therefore the option c is correct

ABC company had 8,000 in accounts receivable on Dec. 31, 2019. However, the company estimated that 2,000 of them would become bad debt. The company recorded the 2,000 as bad debt. What is the impact on the financial statement?

Answers

Answer:

Net income is reduced by 2,000 and the net value of receivables on balance sheet reduced by 2,000

Explanation:

Since it is given that there is $8,000 in account receivable out of which $2,000 would be estimated and recorded as a bad debt

So here the bad debt expense is recorded that means the expenses are increased that ultimately reduced the net income also at the same time the amount of receivable would also decreased by $2,000

Therefore the same is to be considered

PLEASE ANSWER

what is the tort in the situation above?

Answers

TYLER

THIS IS YOUR MOTHOR WHY ARE YOU CHEATING IN BUSSINESS

I THOPUGHT YOU WERE GOING TO PLACES LIKE  A DOCTOR OR LAW BEFORE BUT I WAS FINE WITH BUSINESS UNTIL NOW GET YOUR REAR END HERE AND EXPALIN THIS RIGHT NOW!!!!!

You work as a tutor for ECON 102. You sell your services at $20/hr., and you can only tutor one person at a time. Suppose you currently have 5 clients. If it cost you on average $14/hr to tutor the first student, in order to increase profits you should. a. We need more information to answer b. Find more clients c. Lower the price d. Get rid of some clients e. Continue to see the same number of clients

Answers

Answer:

a. We need more information to answer

Explanation:

In order to correctly answer his question we need more information. Economy is all about the margin, i.e. marginal revenue versus marginal cost. We are given the marginal revenue ($20/hr of tutoring services) but we are not given the marginal costs of tutoring. We only know that the cost of tutoring the first hour is $14, but what about the rest of the hours. Since you have 5 clients, you must be tutoring more than 1 hour per day. It is always easier to determine the marginal revenue since we determine it, while we cannot determine which costs we would like to incur.

Profits should be maximized when marginal revenue = marginal cost, but unless we know the marginal cost of tutoring the rest of the students we simply cannot answer this question.

Joan has the following assets and liabilities: Credit card balance $1,000 Cash $200 Government bonds $3,000 Checking $300 Car loan balance $10,000 Car $15,000 What is Joan's money demand?A) $200 B) $300 C) $500 D) $1,000 E) $11,000

Answers

Answer:

C. $500

Explanation:

Money demand can be defined as the part of an assets in which a person is ready to hold as cash . The money can however be used to purchase goods or services.

Money demand can be denoted as

= Cash balance + Checking account balance.

Given that;

Cash balance = $200

Checking account balance = $300

Money demand = $200 + $300

Money demand = $500

Therefore, Joan's money demand is $500.

A firm has a tax burden ratio of 0.8, a leverage ratio of 1.35, an interest burden of 0.8, and a return on sales of 12%. The firm generates $2.60 in sales per dollar of assets. What is the firm's ROE?

Answers

Answer:

28.64%

Explanation:

ROE = Tax burden * Interest burden * Margin * Turnover * Leverage

ROE = 0.85*0.8*0.12*2.60*1.35

ROE = 0.286416

ROE = 28.64%

Find the equivalent taxable yield of the municipal bond for tax brackets of zero, 10%, 20%, and 30%, if it offers a yield of 4.50%

Answers

Answer and Explanation:

The computation of the equivalent taxable yield is shown below:

For zero = 4.50%

For 10% =  4.50 ÷ 0.90 = 5%

For 20% =  4.50 ÷ 0.80 = 5.625%

For 30% =  4.50 ÷ 0.70 = 6.43%

For 10%, for 20% and for 30% it would reduced the tax brackets by the same

like

for 10%

= 1 - 0.10

= 0.90

The Same applied for other ones

Therefore the above should be the answer

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