# Eco03

## Economics Exam Help 03

Question #1
Use the following data for this question.

X = 25, , and . Use stock prices of \$17.50, 20, 22.50, 25, 27.50, 30, and 32.50.

Note: Diagrams are required as well as the payoff table.

a. Show the payoff to the holder of a call option on this stock.

b. Show the payoff to the writer of a put option

d. Explain whether your solution to part (c) is almost identical to either a long position in the stock or a short position in the stock.

e. Does this strategy have more risk than buying (or selling) the stock or is it the same?

Question #2

Use the following data for this question.

X = 25, , and . Use stock prices of \$17.50, 20, 22.50, 25, 27.50, 30, and 32.50.

a. Construct a straddle and show its payoff and diagram.

b. Construct a sketch and show its payoff. Draw the payoff on the same diagram as in part (a).

c. Find the break-even points for the straddle and the sketch.

d. How do the straddle and sketch relate to each other? What is the expectation of changes in S for each trader?

## How it Works

#### How It works ?

Step 1:- Click on Submit your Assignment here or shown in left side corner of every page and fill the quotation form with all the details. In the comment section, please mention product code mentioned in end of every Q&A Page. You can also send us your details through our email id support@assignmentconsultancy.com with product code in the email body. Product code is essential to locate your questions so please mentioned that in your email or submit your quotes form comment section.

Step 3:- Once we received your assignments through submit your quotes form or email, we will review the Questions and notify our price through our email id. Kindly ensure that our email id assignmentconsultancy.help@gmail.com and support@assignmentconcultancy.com must not go into your spam folders. We request you to provide your expected budget as it will help us in negotiating with our experts.

Step 4:- Once you agreed with our price, kindly pay by clicking on Pay Now and please ensure that while entering your credit card details for making payment, it must be done correctly and address should be your credit card billing address. You can also request for invoice to our live chat representatives.

Step 5:- Once we received the payment we will notify through our email and will deliver the Q&A solution through mail as per agreed upon deadline.

Step 6:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.

## Features

#### Features for Assignment Help

Zero Plagiarism
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.

Relevancy
We believe in providing perfect, relevant and 100% accurate solutions to the student as per questions asked. All our experts are perfect in providing that so as to give unique experience to the students.

Three Stage Quality Check
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.

100% Confidential
All our works are kept as confidential as we respect the integrity and privacy of our clients.

## Related Services

Question #3

Use the following data for this question.

​X = 50 ​​​

a. (i)​Find the price of a call option on this stock. (5 points)

​(ii)​Show its intrinsic value and time premium

b.​(i)​Find the price of a put option on this stock using put-call parity.

​(ii)​Show its intrinsic value and time premium

c. Why is the time premium larger for the call option?

d. What is the lowest price for a call or put option?

e.​Can the time premium ever be negative? Hint: Find the price of a put option with S= \$0.00 and compare it to its intrinsic value.
Question #4

Use the following data for this question.

DELL C1 = \$2.95 with X1 = \$25

DELL C2 = \$0.50 with X2 = \$30

a. Compute the intrinsic value of a bull call position using prices of \$15, 20, 25, 30, 35, and 40. Graph the results.

b. What are the maximum and minimum intrinsic values?

c. Now compute the cost of the position and add it to your solution in part (a). Graph the results.

d. What is the maximum profit and maximum loss?

e. This position could be replicated using put options instead of call options. Explain how you would do this.

f. Use the hedge ratio to show the loss on a portfolio of 200 shares if the portfolio is hedged with put options. The percentage loss on the shares is 2%.

g. Use the hedge ratio to show the loss on a portfolio of 200 shares if the hedge ratio is used to convert a portion of the shares to T-Bills. The percentage loss on the shares is 2%.

d.​What’s the difference between (b) and (c)?

### Product Code :Eco03

To get answer for this question, kindly click here (Note: Don’t forget to write the product code in comment section)

You can also email us at assignmentconsultancy.help@gmail.com but please mentioned product code in the mail body while sending emails.You can browse more questions to get answer in our Q&A sections here.

Summary
User Rating