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option - Frohlich Fin 4504 Name Investments ALL WORK MUST...

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Frohlich Fin 4504 Name___________ Investments ALL WORK MUST BE SHOWN---DO NOT JUST CIRCLE THE ANSWER: Use the following information to answer the next 2 questions: A customer buys 1 XMI Feb 250 Put @ 4 when XMI closes at 247. 1. The time value in the premium is: 2. The intrinsic value of the contract is: 3. All of the following are standardized for listed option contracts EXCEPT: a. strike price b. contract size c. premium d. expiration 4. . Which contract will likely have the highest premium(option price) when ABC closes at $38 per share? SPREADS: Use the following information to answer the next 3 questions: On the same day a customer buys 1 ABC Feb 70 Call @ $4 and sells 1 ABC Feb 80 Call @ $1 when the market price of ABC is $70. 5. The maximum potential loss is:
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6. The breakeven point is (the price where all cash outflows are equal to the market): 7. The maximum potential gain is: a. $300 b. $400 c. $700 d. unlimited Use the following information to answer the next 3 questions: On the same day a customer buys 1 ABC Jan 50 Call @ $2 and sells 1 ABC Jan 35 Call @ $8 when the market price of ABC is $41.
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