Suppose that you just short sold 100 shares of ABC stock for…
Suppose that you just short sold 100 shares of ABC stock for $45 per share. The initial margin requirement is 60%, which you cover by pledging T-bills as collateral. If the price of the stock falls to $38 per share, what return did you earn? Ignore the interest earned on T-bills.
Read DetailsChallenge The national order book for shares of ABC Corp. is…
Challenge The national order book for shares of ABC Corp. is: National Order Book Asks /Limit Sell Orders Price Shares Dealer Ask $99 3,600 $98 900 $97 720 $96 180 Best Ask $95 72 Bids /Limit Buy Orders Price Shares Best Bid $93 15 $92 38 $91 150 $90 188 Dealer Bid $89 750 Suppose a market order to sell 300 shares arrives from a fund manager. At what weighted-average price will this order be filled? (note: this spreads are unrealistically large. In reality, they would be $0.01) Enter your answer as a number of dollars, rounded to the nearest $0.01.
Read DetailsMath Question 10 (BONUS): There are two European options ava…
Math Question 10 (BONUS): There are two European options available on the same non-dividend paying stock with the same time to expiration. The 90-strike call costs $20 and the 100-strike call costs $8. Is there an arbitrage opportunity due to the above call prices? If yes, create a portfolio to show that an arbitrage opportunity exists. If no, explain why not. Assume zero interest rates. Once completed, select “True” below.
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