Question
You bought an at-the-money put of Microsoft with a $280 strike price (at the money means stock price equal exercise price) and 6-months maturity.
You bought an at-the-money put of Microsoft with a $280 strike price (at the money means stock price equal exercise price) and 6-months maturity. The put premium is $X. (X is your last digit of Bentley ID. If your last digit is 0, then use X=1.) Each put contract has the right to sell 100 shares of MSFT. 1. How much should you put as an initial investment? 2. What will be your dollar loss if Microsoft's stock price increases 20%? 3. What will be your dollar profit if Microsoft's stock price drops 20%?
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Given Strike price X 280 Premium of put option X 1 since X is the last digit of Bentley ID Number of ...Get Instant Access to Expert-Tailored Solutions
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
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