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The common stock of Sophia Enterprises serves as the underlying asset for the following derivative securities: ( 1 ) forward contracts, ( 2 ) European
The common stock of Sophia Enterprises serves as the underlying asset for the following derivative securities: forward contracts, Europeanstyle call options, and Europeanstyle put options.
Assuming that all Sophia derivatives expire at the same date in the future, complete the following tables for each of the contract positions below. In calculating net profit, ignore the time differential between the initial derivative expense or receipt and the terminal payoff. Do not round intermediate calculations. Round your answers to the nearest cent. If your answer is zero, enter Use a minus sign to enter negative values, if any.
A long position in a forward with a contract price of $
Expiration Date
Sophia Stock Price Expiration Date
Derivative Payoff Initial Derivative
Premium
Net Profit
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
A long position in a call option with an exercise price of $ and a frontend premium expense of $
Expiration Date
Sophia Stock Price Expiration Date
Derivative Payoff Initial Derivative
Premium
Net Profit
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
A short position in a call option with an exercise price of $ and a frontend premium receipt of $ Assume the call is uncovered.
Expiration Date
Sophia Stock Price Expiration Date
Derivative Payoff Initial Derivative
Premium
Net Profit
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
$ $
$
$
Choose the correct net profit graph for each of the three derivative positions, assuming net profit on the vertical axis and Sophia's expiration date stock price on the horizontal axis. Do not round intermediate calculations. Round your answers for the breakeven point to the nearest cent.
A long position in a forward with a contract price of $
The correct graph is
Select
A
A graph for long forward has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from negative to and from there to
B
A graph for long forward has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from to and from there to negative
C
A graph for long forward has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from negative to negative and from there to
D
A graph for long forward has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from negative to and from there to
The breakeven ie zero profit point is $
A long position in a call option with an exercise price of $ and a frontend premium expense of $
The correct graph is
Select
A
A graph for long call has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from to and from there to negative
B
A graph for long call has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from to and from there to negative
C
A graph for long call has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from negative to negative and from there to
D
A graph for long call has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from negative to and from there to
The breakeven ie zero profit point is $
A short position in a call option with an exercise price of $ and a frontend premium receipt of $
The correct graph is
Select
A
A graph for short call has values from to on the horizontal axis and from negative to on the vertical axis. The graph goes in straight line segments from negative to and from there to
B
A graph for short call has values from to on the horizontal axis and from negative to on the vertical axi
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