Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 18, 2022

Buying a stock and a put option on the stock is a form of insurance. Explain.

Step by Step Solution

★★★★★

3.43 Rating (156 Votes )

There are 3 Steps involved in it

Step: 1

Ans Options started as insurance policies for either long or short stock A put option gives the buye... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: kieso, weygandt and warfield.

14th Edition

9780470587232, 470587288, 470587237, 978-0470587287

More Books

Students also viewed these Finance questions

Question

★★★★★

On November 3, 2012, Sprinkle Co. invested $200,000 in 4,000 shares of the common stock of Pratt Co. Sprinkle classified this investment as available-for-sale. Sprinkle Co. is considering making a...

Answered: 1 week ago

Question

★★★★★

If you own a stock, buying a put option on the stock will greatly reduce your risk. This is the idea behind portfolio insurance. To illustrate, consider a stock that currently sells for $56 and has...

Answered: 1 week ago

Question

★★★★★

``Buying a put option on a stock when the stock is owned is a form of insurance.'' Explain this statement.

Answered: 1 week ago

Question

★★★★★

The kinetic energy of an electron in a particular Bohr orbit of hydrogen is 1.35 10-19 J. (a) Which Bohr orbit does the electron occupy? (b) Suppose the electron moves away from the nucleus to the...

Answered: 1 week ago

Question

★★★★★

The Kroger Co. was founded in 1883 and it is one of the largest retailers in the world based on annual sales. Whole Food Markets claims to be the worlds largest retailer of natural and organic foods....

Answered: 1 week ago

Question

★★★★★

Does a light ray traveling from one medium into another always bend toward the normal, as shown in Figure 35.10a? Explain.

Answered: 1 week ago

Question

★★★★★

In the article Tumor-associated antigen TA-90 immune complex assay predicts subclinical metastasis and survival for patients with early stage melanoma published in the journal Cancer (Kelley et al.,...

Answered: 1 week ago

Question

★★★★★

On paper, replicate the following segment of DNA: 5 A T C G G C T A C G T T C A C 3 3 T A G C C G A T G C A A G T G 5 a. Show the direction of replication of the new strands and indicate the location...

Answered: 1 week ago

Question

★★★★★

Roaming Vehicles Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units,...

Answered: 1 week ago

Question

★★★★★

1. In what ways is Barcelona's management approach consistent with modern developments in management thinking? 2. In what ways does Barcelona's management approach run counter to contemporary...

Answered: 1 week ago

Question

★★★★★

HW 5: Problem 11 Previous Problem Problem List Next Problem (1 point) The distribution of heights of adult men in the U.S. is approximately normal with mean 69 inches and standard deviation 2.5...

Answered: 1 week ago

Question

★★★★★

(1 point) The owner of a small gas station has his 1,500 gallon tank of 93-octane gas filled up once at the beginning of each week. The random variable is the amount of 93-octane the station sells...

Answered: 1 week ago

Question

★★★★★

Create a Fishbone diagram with the problem being coal "mine safety

Answered: 1 week ago

Question

★★★★★

Zoe Swift Tech. Inc. is a contract manufacturing company that produces different customizable parts and essentials for computer hardware. The most popular products of the company are the Liquid...

Answered: 1 week ago

Question

★★★★★

Q: Convert the following numbers to 6-bit signed binary, state if there's overflow a. 14 + 19 b. -14 + (-19) c. -13 +28 d. 13 +(-28)

Answered: 1 week ago

Question

★★★★★

Find the limit . Use I\'Hospital\'s rule when appropriate. lim x l n x 2 x

Answered: 1 week ago

Question

★★★★★

How much would it cost for Chester Corporation to repurchase all its outstanding shares if new brokerage fees totaled 1% of the underlying transaction? Select: 1 $78.4 million $76.8 million $69.8...

Answered: 1 week ago

Question

★★★★★

Use multiplication or division of power series to find the first three nonzero terms in the Maclaurin series for each function. y = e x2 cos x

Answered: 1 week ago

Question

★★★★★

Salaur Company is evaluating a lease arrangement being offered by TSP Company for use of a computer system. The lease is noncancelable, and in no case does Salaur receive title to the computers...

Answered: 1 week ago

Question

★★★★★

Satchel Inc. purchases 10,000 shares of its own previously issued $10 par common stock for $290,000. Assuming the shares are held in the treasury with intent to reissue, what effect does this...

Answered: 1 week ago

Question

★★★★★

On April 1, 2012, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97. Interest payment dates are April 1 and October 1, and the company uses the straight-line method of...

Answered: 1 week ago

Question

★★★★★

In February of 2008, Twitter.com had 475,000 unique visitors. In February of 2009, this figure had grown by 1382%. How many unique visitors did Twitter have in February of 2009 (rounded to the...

Answered: 1 week ago

Question

★★★★★

What was the percent change in unit price when the regular size of Lily soap bars dropped from 100 g to 90 g (with no change in the price per bar)?

Answered: 1 week ago

Question

★★★★★

Elegance shampoo has a suggested retail price of $4.49 for its 500 ml bottle. The manufacturer of the shampoo wants to increase the unit retail price by 10% at the same time that it reduces the...

Answered: 1 week ago

Previous Question Next Question