Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have purchased a put option on Kimberly Clark common stock. The option has an exercise price of $75 and Kimberly Clarks stock currently trades

You have purchased a put option on Kimberly Clark common stock. The option has an exercise price of $75 and Kimberly Clarks stock currently trades at $76.18. The option premium is $1.50 per contract. Assume that 100 shares are traded.

a.

Calculate your net profit on the option if Kimberly Clarks stock price falls to $73 and you exercise the option. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations.)

Net profit $

b.

Calculate your net profit on the option if Kimberly Clarks stock price does not change over the life of the option. (Negative amount should be indicated by a minus sign.)

Net profit $

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

Real Estate Finance And Investment

Authors: Terrence M. Clauretie, G. Stacy Sirmans

8th Edition

1629809942, 9781629809946

More Books

Students also viewed these Finance questions