MGFC10Final_0116_Assig2_Winter2017.pdf - MGFC10H3(Intermediate Finance Assignment 2 Due Date Wednesday By 3pm Assignment can be submitted in class or in

# MGFC10Final_0116_Assig2_Winter2017.pdf -...

• Test Prep
• 4

This preview shows page 1 - 3 out of 4 pages.

MGFC10H3 (Intermediate Finance) Assignment 2 Due Date: Wednesday March 29, 2017 By 3pm Assignment can be submitted in class or in my office (IC366). If I am not in the office please slip the assignment under the door. Professor: Syed Ahmed STUDENT’S NAME: ___________________________________________________________ Last First Middle STUDENT’S I.D.: _____________________________________________________________ SECTION: L01 L02 L03 Tues 9-11am Tues 1-3pm Mon 1-3pm Please circle your section QUESTION NO. MAX. MARKS MARK OBTAINED 1 20 __________________ 2 15 __________________ 3 25 __________________ 4 25 __________________ 5 15 __________________ TOTAL MARKS 100 __________________ Bonus Question (2% of Course grade) ______________ Management, 1265 Military Trail, Toronto, ON, M1C 1A4, Canada
-2- QUESTION 1: a. Explain how Cynthia Bui can profit in each of the following cases. Demonstrate that she would have no future liability at the expiration of the options. What is her minimum guaranteed profit in each case? 1. European calls on ABC Limited: Exercise price of \$30 is trading for \$2, and exercise price of \$35 is trading for \$3. Both are expiring in May. 2. American puts on Penny JC Enterprises: May expiry put with an exercise price of \$30 is trading at \$3, and June expiry put with an exercise price of \$30 is trading at \$2. b. Cammy Wang purchased one XYZ Technologies May 100 call contract at \$5 and wrote one May 105 call contract at \$2. Hint: Exercise prices are \$100 and \$105 per option and option prices are \$5 and \$2 per option.

#### You've reached the end of your free preview.

Want to read all 4 pages?

• Fall '16
• SyedAhmed
• Dividend yield

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern