Questions from General Investment

Q: A $100,000 GNMA pass through bond issue has a

A $100,000 GNMA pass through bond issue has a value of $107,680. The value of the interest-only payments is $52,973. What is the value of the principal only payment?

Q: A homeowner takes a 15-year fixed-rate mortgage for

A homeowner takes a 15-year fixed-rate mortgage for $140,000 at 7.6 percent. After seven years, the homeowner sells the house and pays off the remaining principal. How much is the principal payment?

Q: Suppose you purchase eight call contracts on Macron Technology stock. The

Suppose you purchase eight call contracts on Macron Technology stock. The strike price is $60 and the premium is $3. If, at expiration, the stock is selling for $64 per share, what are your call optio...

Q: A put option with a strike price of $50 sells for

A put option with a strike price of $50 sells for $3.20. The option expires in two months and the current stock price is $51. If the risk-free interest rate is 5 percent, what is the price of a call o...

Q: A stock is currently selling for $45. In one period

A stock is currently selling for $45. In one period, the stock will move up by a factor of 1.15 or down by a factor of 0.87. A call option with a strike price of $50 is available. If the risk-free rat...

Q: Mr. Franklin wants to compute the value of the put option

Mr. Franklin wants to compute the value of the put option that corresponds to the call value calculated in the previous question. Which of the following is the closest to his answer? a. $4.78 b. $5.55...

Q: A stock is currently priced at $74 and will move up

A stock is currently priced at $74 and will move up by a factor of 1.20 or down by a factor of 0.80 over the next period. The risk-free rate of interest is 4.2 percent. What is the value of a call op...

Q: You are managing a pension fund with a value of $300

You are managing a pension fund with a value of $300 million and a beta of 1.07. You are concerned about a market decline and wish to hedge the portfolio. You have decided to use SPX calls. How many c...

Q: Given the following information for Hetrich, Inc., calculate the operating

Given the following information for Hetrich, Inc., calculate the operating cash flow, investment cash flow, financing cash flow, and net cash flow: Net income: ………………………………………$175 Depreciation: ……………...

Q: Suppose you purchase five put contracts on Testaburger Co. The strike

Suppose you purchase five put contracts on Testaburger Co. The strike price is $45 and the premium is $3. If, at expiration, the stock is selling for $39 per share, what are your put options worth? Wh...