Answered step by step
Verified Expert Solution
Question
1 Approved Answer
investment 1) An investor is considering buying 700 shares of Vodafone company at 43 EGP per share. dvisors predict that the stock price may increase
investment
1) An investor is considering buying 700 shares of Vodafone company at 43 EGP per share. dvisors predict that the stock price may increase to 52 EGP per share in the coming 3 honths. To hedge this, the investor could purchase a 90-day call option at a strike price f41 EGP for 7,500 EGP. 3 a) What profit/loss would the investor realize if the stock price increased to 50 EGP per share? b) At what stock price would the investor break even? c) The standard option contract is for: 1 share of stock, 50 shares of stock, 100 shares of stocks, or 1000 shares of stock 2) An investor has 80,000 EGP which will be invested in a long-put option contract, the premium per share is 20 EGP. If the market price of the stock on the exercise date is 50 EGP, and the strike price is 56 EGP. 2 a) What is the value of the contract on the exercise date? and determine whether it's in the money, out of the money, or at the money? And why? b) What is the rate of return? 3) If you are sure that the price of stock X would increase dramatically within 4 months. Which type of derivative contract would you invest in? and why? 4) A stock that has a current price of 50 EGP, and a strike price of 47 EGP has an associated put option priced at 4 EGP per contract. What is the intrinsic value pf this put, and what is the time value Step by Step Solution
There are 3 Steps involved in it
Step: 1
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