The current price of a non - dividend - paying stock is $30. Over the next six months it is expected to rise to $36 or fall to $26. Assume the risk - free rate is zero. An investor sells call options with a strike price of $32. Which of the following hedges the position? A. Buy 0.6 shares for each call option sold B. Buy 0.4 shares for each call option sold C. Short 0.6 shares for each call option sold D. Short 0.4 shares for each call option sold.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The current price of a non - dividend - paying stock is $30. Over the next six months it is expected to rise to $36 or fall to $26. Assume ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Which of the following is an example of flexible income? You work 40 hours per week at a local grocery store earning $8.75 per hour. You have a job as a bank manager earning a salary of $32,500 per year.
Answers (1)
The factor that differentiates top-down processing from bottom-up processing is that top-down processing:
Answers (1)
Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause a.
Answers (1)
How does the visibility of groups such as blacks and Asians contrast with the invisibility of white ethics in shaping their organization experiences?
Answers (1)
Since investors tend to dislike risk and like certainty, the more volatile a stock, the less valuable will be an option to purchase the stock, other things held constant. A. True B. False
Answers (1)
New Questions in Business
Carson company on july 15 sells merchandise on account to tayler co. for $2,000, terms 2/10, n/30. on july 20 tayler co. returns merchandise worth $800 to carson company. on july 24 payment is received from tayler co. for the balance due.
Answers (1)
How many types of management are there in business?
Answers (1)
During 2021, its first year of operations, Pave Construction provides services on account of $160,000. By the end of 2021, cash collections on these accounts total $110,000. Pave estimates that 25% of the uncollected accounts will be uncollectible.
Answers (1)
Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income, generating an initial change in consumption equal to: A) - $1,000 billion B) -
Answers (1)
The Midwest Division of Frackle Corporation $30 to make, of which $21 is variable. Midwest Division sells Part 7B to other companies for $47. The Northern Division of Frackle Corporation can use Part 7B in one of its products.
Answers (1)