Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sigma Limited, a gold manufacturer, hold a long call European option with an exercise price of $500 per ounce for 100 ounces only to be

"Sigma Limited, a gold manufacturer, hold a long call European option with an exercise price of $500 per ounce for 100 ounces only to be exercised in 6 months. The premium is $50 per ounce. If market gold price after 6 months is $400 per ounce, what would be the gain or loss assuming no time value of money."

A)-$15,000"

B)"$5,000 "

C)"$15,000 "

D)"-$5,000"

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

blur-text-image

Step: 3

blur-text-image

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

Financial Markets And Institutions

Authors: Jeff Madura

10th Edition

1285531507, 9781285531502

More Books

Students also viewed these Finance questions

Question

Gambling by student and professional athletes

Answered: 1 week ago