Title Kerry bought 20 put options on the stock of Global Consolidated Megacorp. The stock currently sells. Description Kerry bought 20 put options on the stock of Global Consolidated Megacorp. The stock currently sells for $17.96 per share, and the strike price is $17.50. The option premium was $5.18. a. Do these options give Kerry the right to buy or sell the company’s shares? How many shares does she have the right to buy/sell? b. Calculate the total amount she paid for these options. c. Calculate her profit or loss if the price rises to $22.50. d. Calculate her profit of loss if the price rises to $20.00. e. Calculate her profit or loss if the price drops to $15.00.
Title Kerry bought 20 put options on the stock of Global Consolidated Megacorp. The stock currently sells. Description Kerry bought 20 put options on the stock of Global Consolidated Megacorp. The stock currently sells for $17.96 per share, and the strike price is $17.50. The option premium was $5.18. a. Do these options give Kerry the right to buy or sell the company’s shares? How many shares does she have the right to buy/sell? b. Calculate the total amount she paid for these options. c. Calculate her profit or loss if the price rises to $22.50. d. Calculate her profit of loss if the price rises to $20.00. e. Calculate her profit or loss if the price drops to $15.00.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Title
Kerry bought 20 put options on the stock of Global Consolidated Megacorp. The stock currently sells.
Description
Kerry bought 20 put options on the stock of Global Consolidated Megacorp. The stock currently sells for $17.96 per share, and the strike price is $17.50. The option premium was $5.18.
a. Do these options give Kerry the right to buy or sell the company’s shares? How many shares does she have the right to buy/sell?
b. Calculate the total amount she paid for these options.
c. Calculate her profit or loss if the price rises to $22.50.
d. Calculate her profit of loss if the price rises to $20.00.
e. Calculate her profit or loss if the price drops to $15.00.
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