A customer buys 100 shares of ABC stock at $44 and sells 1 ABC Jan 45 Call at $5. Subsequently, the market price of ABC goes to $59 and the call contract is exercised. The customer has a:

Answers

Answer 1

Answer:

Answer:

loss = $1,000

Explanation:

the customer will receive $5 (call price) + $44 (call price) = $49 for every share that he/she owns.

since the market price was $59, then the customer lost $59 - $49 = $10 for every share that he/she owned, resulting in a total loss = $10 per share x 100 shares = $1,000

A call option gives the buyer the option to purchase a stock at a set price during a specific time frame.

Related Questions

Sunset Products manufactures skateboards. The following transactions occurred in March:1. Purchased $20,500 of materials on account.2. Issued $1,050 of supplies from the materials inventory.3. Purchased $25,100 of materials on account.4. Paid for the materials purchased in the transaction (1) using cash.5. Issued $30,100 in direct materials to the production department.6. Incurred direct labor costs of $25,500, which were credited to Wages Payable.7. Paid $21,600 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing shop.8. Applied overhead on the basis of 110 percent of direct labor costs.9. Recognized depreciation on manufacturing property, plant, and equipment of $5,100.The following balances appeared in the accounts of SunsetProducts for March:Beginning EndingMaterials Inventory $9,150 _____Work-in-Process Inventory $16,600 _____Finished Goods Inventory $65,100 $36,600cost of goods sold $73,100Prepare T-Accounts to show the flow of costs during the period from materials inventory through the cost of goods sold.
Kingbird Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows. KingBird Resort Trial Balance August 31, 2020 Debit Credit Cash $25,900 Prepaid Insurance 10,800 Supplies 8,900 Land 22,000 Buildings 122,000 Equipment 18,000 Accounts Payable $10,800 Unearned Rent Revenue 10,900 Mortgage Payable 62,000 Common Stock 99,300 Retained Earnings 9,000 Dividends 5,000 Rent Revenue 78,200 Salaries and Wages Expense 44,800 Utilities Expenses 9,200 Maintenance and Repairs Expense 3,600 $270,200 $270,200 Other data: 1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020. 2. An inventory count on August 31 shows $443 of supplies on hand. 3. Annual depreciation rates are (a) buildings (4%) (b) equipment (10%). Salvage value is estimated to be 10% of cost. 4. Unearned Rent Revenue of $3,472 was earned prior to August 31. 5. Salaries of $392 were unpaid at August 31. 6. Rentals of $873 were due from tenants at August 31. 7. The mortgage interest rate is 8% per year.A. Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.No. Date Account Titles and Explanation Debit Credit1. Aug. 312. Aug. 313a. Aug. 313b. Aug. 314. Aug. 315. Aug. 316. Aug. 317. Aug. 31B. Prepare an adjusted trial balance on August 31.
Under sec rules establashed by nsmia, an individual that files a registration application will be denied if the applicant has:
Look carefully at the following list. a. The coins in your pocket. b. The funds in your checking account. c. The funds in your savings account. d. The traveler's check that you have left over from a trip. e. Your Citibank Platinum MasterCard. Which of the things above are NOT included in the M1LOADING... definition of the money supply?
The tragedy of the commons suggests that ________.(A) an ongoing process of give and take is based on mutual trust.(C) mutual trust is based on an ongoing process of give and take.

A new project would require an immediate increase in raw materials in the amount of $12,000. The firm expects that accounts payable will automatically increase $8,500. How much must the firm expect its investment in net working capital to change if they accept this project

Answers

Answer: Increase by $3,500

Explanation:

The Net Working Capital of a company is calculated by subtracting Current liabilities from current assets.

Raw materials are current assets and Accounts Payable are current liabilities.

The Net working capital resulting from accepting this project is;

= 12,000 - 8,500

= $3,500

Net Working capital investment would increase by $3,500.

Crystal Glassware Company issues $1,042,000 of its 14%, 10-year bonds at 97 on February 28,2019. The bonds pay interest on February 28 and August 31. Assume that Crystal uses thestraight-line method for amortization. What net amount will be reported for the bonds on theAugust 31, 2019 balance sheet?A) $1,010,740 B) $1,012,303 C) $1,009,177 D) $1,042,000

Answers

Answer:

The correct option is B. $1,012,303

Explanation:

For computing the net amount, the following calculations are need to be done which is shown below:

1. Calculation the total value of bond which equals to

= Issue amount × price

= $1,042,000 × (97 ÷ 100)

= $1,010,740

2. Now compute the discount which shown below:

= Issue amount - total value

= $1,042,000 - $1,010,740

= $31,260

3. Then, compute the semiannual discount amount by applying the straight line method

= Discount value ÷ number of years

where,

number of year would be multiply by 2 = 2 × 10 = 20 years

So, the value would be equal to

= $31,260 ÷ 20 years

= $1,563

4. So, the net amount would be

= Total value of bond + semiannual discount

= $1,010,740 + $1,563

= $1,012,303

Hence, the net amount will be reported for the bonds on the August 31, 2019 balance sheet is $1,012,303

Therefore, the correct option is B. $1,012,303

To encourage employee ownership of the company's common shares, KL Corp. permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 12% discount. During May, employees purchased 10,000 shares at a time when the market price of the shares on the New York Stock Exchange was $12 per share. KL will record compensation expense associated with the May purchases of:

Answers

Answer:

Dr Cash 105,600

Dr Compensation Expense 14,400

Cr Common Stock 10,000

Cr Paid-In Capital – Excess of Par 110,000

Explanation:

KL Corp Journal entry

Dr Cash 105,600

Dr Compensation Expense 14,400 (10,000*12*12%)

Cr Common Stock 10,000 (10,000*1)

Cr Paid-In Capital – Excess of Par 110,000

(10,000*(12-1))

Samantha was in the final stages of selling her existing business, but she backed out of the deal at the last minute because the buyer asked her to sign a contract stating that she would not enter into a similar business within the state for at least 15 years. This is an example of ______.

Answers

Answer:

An unreasonable noncompete clause

Explanation:

A noncompete clause is any provision of a contract that ensures that one party will not compete directly with the other party by starting a similar business or profession that generates competition between them. In the question, there was an example of An unreasonable noncompete clause, which is any clause provided for in a contract that goes beyond the limitations determined to be legally binding, such as the time period and geographic area where an individual cannot to compete.

JB Instruments is analyzing a proposed project. The company expects to sell 1,600 units, ±3 percent. The expected variable cost per unit is $220 and the expected fixed costs are $438,000. Cost estimates are considered accurate within a ±2 percent range. The depreciation expense is $64,000. The sales price is estimated at $647 per unit, ±2 percent. What is the sales revenue under the worst-case scenario?

Answers

Answer:

$984,061.12

Explanation:

The computation of sales revenue under the worst-case scenario is shown below:-

Sales revenue under the worst-case scenario = Quantity sold × Price

= (1,600 - 1,600 × 3%) × ($647 - $647 × 2%)

= (1,600 - 48) × ($647 - 12.94)

= 1,552 × 634.06

= $984,061.12

Therefore for computing the sales revenue under the worst-case scenario we simply applied the above formula.

Fixed cost per unit is $7 when 25,000 units are produced and $5 when 35,000 units are produced. What is the total fixed cost when nothing is produced? a.$12 b.$130,000 c.$200,000 d.$175,000

Answers

Answer:

The correct answer is D.

Explanation:

Giving the following information:

The fixed cost per unit is $7 when 25,000 units are produced and $5 when 35,000 units are produced.

Total fixed costs= 7*25,000= 175,000

Total fixed costs= 5*35,000= 175,000

Fixed costs= $175,000

Other Questions

Question 2 of 10 What is the main advantage of having a skill set with a high market value? O A. Workers are more productive per hour using those skills. O B. Worker organizations have a major need for those skills. O C. Employers are willing to pay more for those skills. O D. There are fewer regulations restricting those skills.

Manner, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and20,000 shares of $1 par value common stock outstanding at December 31, 2010. Therewere no dividends declared in 2009. The board of directors declares and pays a $45,000dividend in 2010. What is the amount of dividends received by the common stockholdersin 2010?a. $0b. $25,000c. $45,000d. $20,000

Suppose that LilyMac Photography has annual sales of $290,000, cost of goods sold of $155,000, average inventories of $3,500, average accounts receivable of $21,000, and an average accounts payable balance of $10,000. Assuming that all of LilyMac's sales are on credit, what will be the firm's cash cycle?

Of the following groups, which benefits most from a government price support program that establishes a floor price for an agricultural product that is higher than the product's market clearing price? Select one: a. Consumers, who purchase more units of the product than they did before the price support program was implemented b. Taxpayers, who no longer must provide funds to purchase surplus units of the product once the price support program is in place c. The government, which receives subsidy payments from producers that are required to sell more of the product at a higher price under the government's program d. Producers, who earn a higher price on the sale of each unit and also sell more units, thereby unambiguously earning higher revenues