You engage in the following strategy: Buy a call, strike price = $5, option premium = $2 Buy a call strike = $15, option premium = $4 Sell two call options with a strike price = $10; option premium = $2.50 each All options are written on 100 shares. Within $10, what is the most that you can make?  

You sell a 2-period covered call on 100 shares of a stock currently trading at $25.00 per share. The strike price of the call option is $25.00 per share. The risk free rate is 25% per period and in each of the next two periods the stock can rise by 40% or fall by 20%. How many shares should you buy today to set up a 2-period delta hedged covered call?

You sell a 2-period covered call on 100 shares of a stock currently trading at $25.00 per share. The strike price of the call option is $25.00 per share. The risk free rate is 25% per period and in each of the next two periods the stock can rise by 40% or fall by 20%. What is your accounting profit after one period? Assume for the sake of argument that you shut down the operation at time one, selling your shares and buying back the option.  

Your firm is a U.S.-based importer of British bicycles. AS AN IMPORTER, YOU ARE BUYING BICYCLES AND PAYING OUT BRITISH POUNDS. You have placed an order with an English supplier for £60,000. worth of bicycles. Payment (in £) is due in 12 months. One-year at-the-money put and call options on £10,000 exist. The spot exchange rate is $1.50/£. In the next period, the pound can increase in dollar value to $2.25/£ or fall to $1.00/£. The interest rate in dollars is i$ = 9.20%; the interest rate in pounds is i£ = 4.00%. You decide to hedge this receivable from pounds into dollars by buying at-the-money call options on £10,000.  Calculate the dollar-denominated cash flow at expiry of your option strategy within $5

Your firm is a U.S.-based importer of British bicycles. AS AN IMPORTER, YOU ARE BUYING BICYCLES AND PAYING OUT BRITISH POUNDS. You have placed an order with an English supplier for £60,000. worth of bicycles. Payment (in £) is due in 12 months. One-year at-the-money put and call options on £10,000 exist. The spot exchange rate is $1.50/£. In the next period, the pound can increase in dollar value to $2.25/£ or fall to $1.00/£. The interest rate in dollars is i$ = 9.20%; the interest rate in pounds is i£ = 4.00%. You decide to get paid today to hedge this receivable from pounds into dollars.  What is your strategy?

Your firm is a U.S.-based importer of British bicycles. AS AN IMPORTER, YOU ARE BUYING BICYCLES AND PAYING OUT BRITISH POUNDS. You have placed an order with an English supplier for £60,000. worth of bicycles. Payment (in £) is due in 12 months. One-year at-the-money put and call options on £10,000 exist. The spot exchange rate is $1.50/£. In the next period, the pound can increase in dollar value to $2.25/£ or fall to $1.00/£. The interest rate in dollars is i$ = 9.20%; the interest rate in pounds is i£ = 4.00%.   Compute the net future value of this receivable in USD within $5.00 when using either a forward market hedge or a money market hedge.

You sell a 2-period covered call on 100 shares of a stock currently trading at $25.00 per share. The strike price of the call option is $25.00 per share. The risk free rate is 25% per period and in each of the next two periods the stock can rise by 40% or fall by 20%. If the stock goes DOWN in period one and UP in period two, what is your accounting profit after 2 periods? Assume that you maintain the hedge by buying or selling the appropriate number of shares each period.

The current stock price is $10 per share. The strike price is $9 per share. The option is written on 100 shares. The one-period risk-free rate is 0%. In each of the next 2 periods the stock can rise by 10% or fall by 10%  You sell one call option on 100 shares and buy the appropriate number of shares at time zero to start a delta-hedged covered call program. After one period the stock falls by 10% from $10 to $9 per share. What actions should you take to keep the covered call program alive?

Long-Response Questions: 20 points eachNote: A minimum of 150 words required. You can choose to answer one, some, or all of the questions below: How did Enlightenment ideas influence the revolutionary movements in Europe and North America during the late 18th and early 19th centuries? In what ways did the American Revolution influence subsequent revolutionary movements in Europe, such as the French Revolution? What were the main causes of the French Revolution, and how did they reflect broader European social and economic trends? Compare the American and French Revolutions in terms of their causes, methods, and outcomes.  

Long-Response Questions: 20 points eachNote: A minimum of 150 words required. You can choose to answer one, some, or all of the questions below: Analyze the significance of the transatlantic slave trade in creating economic interdependence among Europe, Africa, and the Americas. How did the discovery of the Americas transform the economic systems of Europe, Africa, and the Americas, laying the foundation for the Atlantic World? In what ways did European colonization efforts transform Indigenous societies and their cultures in the Americas? Analyze the significance of the transatlantic slave trade in creating economic interdependence among Europe, Africa, and the Americas.