Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on May 07, 2024

you design a bear spread using two put options : one with a strike price of x1=50 and a premium p1=3, and the other with

you design a bear spread using two put options : one with a strike price of x1=50 and a premium p1=3, and the other with the strike price of x2=75 and a premium p2=28. what is the initial cash flow?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

In a bear put spread you buy a higher strike put long put and sell a lowe... 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

Step: 3

Document Format ( 2 attachments)

663d499523786_968438.pdf

180 KBs PDF File

663d499523786_968438.docx

120 KBs Word File

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

Fundamentals of Futures and Options Markets

Authors: John C. Hull

8th edition

978-1292155036, 1292155035, 132993341, 978-0132993340

More Books

Students also viewed these Finance questions

Question

★★★★★

You think the price of AMZN stock, which is currently $900 is likely to change significantly over the next three months, you are just not sure which direction. So you buy a long straddle position,...

Answered: 1 week ago

Question

★★★★★

Suppose that the price of a non-dividend-paying stock is $32, its volatility is 30%, and the risk-free rate for all maturities is 5% per annum. Use DerivaGem to calculate the cost of setting up the...

Answered: 1 week ago

Question

★★★★★

McGuire Industries prepares budgets to help manage the company. McGuire is budgeting for the fiscal year ended January 31, 2021. During the preceding year ended January 31, 2020, sales totaled $9,200...

Answered: 1 week ago

Question

★★★★★

Using the data in the Excel file Student Grades, apply the Excel Regression tool using the midterm grade as the independent variable and the final exam grade as the dependent variable. a. Interpret...

Answered: 1 week ago

Question

★★★★★

A series of questions on sports and world events was asked of 14 randomly selected young adult naturalized citizens. The results were translated into sports and world events knowledge scores. The...

Answered: 1 week ago

Question

★★★★★

The number of hits to a website follows a Poisson process with a rate of 8 hits per minute. What is the probability that there will be 20 hits in a five-minute period, if we know that there have been...

Answered: 1 week ago

Question

★★★★★

The inventory, purchases, and sales of Product CAT for March and April are listed below. The company closes its books at the end of each month. It uses the periodic inventory system. Required 1....

Answered: 1 week ago

Question

★★★★★

Required information Problem 13-7 Prepare a statement of Cash Flows (L013-1, L013-2] [The following information applies to the questions displayed below.) Comparative financial statements for Weaver...

Answered: 1 week ago

Question

★★★★★

Shadee Corporation expects to sell 6 4 0 sun shades in May and 3 9 0 in June. Each shades sells for $ 1 5 . Shadee s beginning and ending finished goods inventories for May are 8 5 and 5 0 shades,...

Answered: 1 week ago

Question

★★★★★

1. Explain how organizations can create team players. 2. What is social loafing? How can the management undermine the tendency of social loafing? 3. Distinguish between high-context and low-context...

Answered: 1 week ago

Question

★★★★★

Determine the characteristic equation for longitudinal vibration of a bar of length L , elastic modulus E , and mass density p , that is fixed at the end x = 0 and has a mass m at the other end x = L...

Answered: 1 week ago

Question

★★★★★

Week 2 Prepare 1 : Week 3 Assignment Your first assignment is due next week. In this assignment, you will prepare and include a 2 5 0 3 0 0 word elevator pitch ( a short description of an idea,...

Answered: 1 week ago

Question

★★★★★

PART B Identify any specific issues with Moka s current accounting practices relating to revenue recognition and receivables management. Outline any other strengths and weaknesses with Moka s...

Answered: 1 week ago

Question

★★★★★

(a) During the audit of the Weak Bank (W), RBI has suggested that the Bank should either merge with another bank or may close down. Strong Bank (S) has submitted a proposal of merger of Weak Bank...

Answered: 1 week ago

Question

★★★★★

Hive also supports custom extensions written in _ _ _ _ _ _ _ _ _ _ _ _ Question 3 Answer a . C b . C + + c . C# d . Java

Answered: 1 week ago

Question

★★★★★

Modify the CYK algorithm so that it applies to any CFG, not just those in CNF.

Answered: 1 week ago

Question

★★★★★

Portfolio A consists of a one-year zero-coupon bond with a face value of $2,000 and a 10-year zero-coupon bond with a face value of $6,000. Portfolio B consists of a 5.95-year zero-coupon bond with a...

Answered: 1 week ago

Question

★★★★★

Consider again the situation in Problem 15.16. Suppose that the portfolio has a beta of 2.0, the risk-free interest rate is 5% per annum, and the dividend yield on both the portfolio and the index is...

Answered: 1 week ago

Question

★★★★★

The following table gives Treasury zero rates and cash flows on a Treasury bond: Zero rates are continuously compounded (a) What is the bonds theoretical price? (b) What is the bonds yield? Maturity...

Answered: 1 week ago

Question

★★★★★

34. Fidos in the Car It seems that driving with a pet in the car is the third worst driving distraction, behind talking on the phone and texting. According to an American Automobile Association...

Answered: 1 week ago

Question

★★★★★

32. Road Trip! Parents with children list a GPS system (28%) and a DVD player (28%) as must have accessories for a road trip.15 Suppose a sample of n51000 parents are randomly selected and asked what...

Answered: 1 week ago

Question

★★★★★

Calculate SE ( p ) for n=100 and the values of p given 21. p=.90

Answered: 1 week ago

Previous Question Next Question