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HELP WITH FINANCE PROBLEMS QUESTIONS NEED TO BE IN EXCEL FORMAT thank you 1)A threemonth call option is the right to buy a stock at

HELP WITH FINANCE PROBLEMS

QUESTIONS NEED TO BE IN EXCEL FORMAT

thank you

image text in transcribed 1)A threemonth call option is the right to buy a stock at $20. Currently the stock is selling for $22 and the call is selling for five dollars. You are considering buying 100 shares of the stock ($2200) or one call option ($500). A) the price of the stock rises to $29 within three months what would be the profits or losses on each position? What would be the percentage gains or losses? B) if the price of the stock declines to $18 within three months, what would be the profits or losses on each position? What would be the percentage gains or losses? C) if the price of the stock remains stable at $22, what would be the percentage gains or losses at the expiration of the call option? 2) A particular call is the option to buy stock at $25. It expires in six months and currently sells for $4 when the price of the stock is $26. a) What is the intrinsic value of the call? What is the time premium paid for the call? b) What will the value of this call be after six months if the price is $20? $25? $30? $40? c) If the price of the stock rises to $40 at the expiration date of the call, what is the percentage increase in the value of the call? Does his example illustrate favorable leverage? d) If an individual buys the stock and sells this call, what is the cash outflow (i.e, net cost) and what will the profit on the position be after six months if the price of the stock is $10? $15? $20? $25? $26? $30? $40? e) If an individual sells this call naked, what will the profit or loss be on the position after six months if the price of the stock is $20? $26? $40? 3)A particular put is the option to sell stock at $40. It expires after three months and currently sells for $2 when the price of the stock is $42. a) If an investor buys the put, what will the profit be after three months if the price of the stock is $45? $40? $35? b) What will the profit from selling this put be after three months if the price of the stock is $45? $40? $35? c) Compare the answers to a) and b). What is the implication of the comparison

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