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Question
You find digital option quotes on jobless claims. You can buy a call option with a strike price of 300,000 jobless claims. This option pays $100 if actual claims exceed the strike price and pays zero otherwise. The option costs $68. A second digital call with a strike price of 305,000 jobless claims is available at a cost of $53. Suppose you buy the option with the 300,000 strike and sell the option with the 305,000 strike and jobless claims actually wind up at 303,000. Your net profit on the position is ______.
A. -$15
B. $200
C. $85
D. $185
Answer
This answer is hidden. It contains 157 characters.
Related questions
Q:
Which of the following does not approximate the performance of a buy-and-hold portfolio strategy?
A. An equally weighted index
B. A price-weighted index
C. A value-weighted index
D. All of these options (Weights are not a factor in this situation.)
Q:
Under a "passive core" portfolio management strategy, a manager would ___________.
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Q:
An active asset allocation strategy involves _________.
A. investing in the stock of companies that are price takers
B. maintaining approximately the same proportions of a portfolio in each asset class over time
C. varying the proportions of a portfolio in each asset class in response to changing market conditions
D. selecting individual securities in different sectors that are believed to be undervalued
Q:
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A. $18,000
B. $37,500
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Q:
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C. risk premium
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Q:
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Q:
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Q:
The asset universe is the _____________________.
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Q:
An investor is looking at different retirement investment choices, and he is willing to accept one with upside potential even if that means sacrificing certainty. Which of the following will he most likely select?
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Q:
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Q:
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Q:
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A. return requirement
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Q:
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What is the amount of the total contribution to his 403b if John contributes 5% of his own money?
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B. $8,400
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Q:
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Q:
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Q:
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Q:
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Q:
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A. older workers
B. high-income workers
C. younger workers
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Q:
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Q:
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II. Durability of marriage
III. Expected length of your base (Social Security) annuity
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Q:
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A. traditional retirement plan
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C. 401k plan
D. 403b plan
Q:
A decrease of 1% in both your tax exemption and your income tax rate would, on net, _______________.
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B. make you worse off
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Q:
A typical hedge fund incentive bonus is usually equal to ________ of investment profits beyond a predetermined benchmark index.
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B. 10%
C. 20%
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Q:
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Q:
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Q:
You manage a $15 million hedge fund portfolio with beta = 1.2 and alpha = 2% per quarter. Assume the risk-free rate is 2% per quarter and the current value of the S&P 500 Index is 1,200. You want to exploit the positive alpha, but you are afraid that the stock market may fall and you want to hedge your portfolio by selling 3-month S&P 500 future contracts. The S&P contract multiplier is $250.
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D. $16,000,000
Q:
You manage a $15 million hedge fund portfolio with beta = 1.2 and alpha = 2% per quarter. Assume the risk-free rate is 2% per quarter and the current value of the S&P 500 Index is 1,200. You want to exploit the positive alpha, but you are afraid that the stock market may fall and you want to hedge your portfolio by selling 3-month S&P 500 future contracts. The S&P contract multiplier is $250.
When you hedge your stock portfolio with futures contracts, the value of your portfolio beta is __________.
A. 0
B. 1
C. 1.2
D. The answer cannot be determined from the information given.