Suppose you have $60,000 to invest. You’re considering Miller-Moore Equine Enter
ID: 2795417 • Letter: S
Question
Suppose you have $60,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $60 per share. You notice that a put option with a $60 strike is also available with a premium of $3. Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $57 per share. (Round your answer to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required. Omit the "%" sign in your response.)
Suppose you have $60,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $60 per share. You notice that a put option with a $60 strike is also available with a premium of $3. Calculate your percentage return on the put option for the six-month holding period if the stock price declines to $57 per share. (Round your answer to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required. Omit the "%" sign in your response.)
Explanation / Answer
CALCULATION OF RETURN INVESTMENT IN STOCK
Put option only exercised when the strike price is less then put option price.
Return = Put option Price - Strike price - Premium on Put option
Return = $ 60 - $ 57 - $ #
Return = $ 0
Answer = $ 0
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