Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. dorothy santosuosso does a lot of investing in the

Dorothy Santosuosso does a lot of investing in the stock market and is a frequent...

50.1K

Verified Solution

Question

Finance

image

Dorothy Santosuosso does a lot of investing in the stock market and is a frequent user of stock-index options. She is convinced that the market is about to undergo a broad retreat and has decided to buy a put option on the S&P 100 Index. The put carries a strike price of 905 and is quoted in the financial press at $14.50. Although the S&P Index of 100 stocks is currently at 900.00, Dorothy thinks it will drop to 850 by the expiration date on the option. How much profit will she make, and what will be her holding period return if she is right? How much will she lose if the S&P 100 goes up (rather than down) by 25 points and reaches 925 by the date of expiration? The profit from this investment would be $ x. (Round to the nearest cent.) If she is right, her holding period return will be x %. (Round to the nearest whole percent.) If the S&P 100 goes up (rather than down) by 25 points and reaches 925 by the date of expiration, she will lose $ x. (Round to the nearest cent.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

A. ArmaCo must determine whether or not to drill for oil at the Northern part of...

Operations Management
Q

Which evolutionary process would you argue is currently causing the largest impact on the evolution of...

Biology
Q

we were introduced to hydrolytic enzymes, list two enzymes and their function. Using your critical thinking,...

Biology
Q

Phasors w=5+2i, u=2-2i, are two complex numbers written in component form. a. Draw them in the imaginary plane. b....

Physics
Q

Refi Corporation is planning to repurchase part of its common stock by issuing corporate debt. As...

Accounting
Q

A group of mutations, known as MT-ND1, have been identified in mitochondrial DNA. These mutations...

Biology
Q

A large number of identical elastic balls are moving randomly inside a fixed vertical cylindrical...

Physics
Q

Find the slope m of the line through P 2 6 and Q 5 21...

Calculus
Q

Beginning inventory, purchases, and sales for Item ER27 are as follows: Assuming a...

Accounting
Q

Henderson co. Has a fixed cost of $36000 and a contribution margin ratio of 24%....

Accounting
Q

Thank you! No. Date Account Titles and Explanation Debit Credit Dlscount on Bond Issue...

Accounting
Q

Gibson's Bodywork does automotive collision work. An insurance agency has determined that the standard time...

Accounting