139. On January 1st, 20x12, ABC Inc. agrees to a futures contract to buy 1,000 shares of DEF Inc. for $20 per share in 60 days. The current value of the shares on January 1, 20x12 is $22 per share. The broker requires a 20% margin payment. The fair value of the shares is $24 per share on January 31st, 20x12 and $18 per share on February 29th, 20x12. Required: Prepare all relevant journal entries.
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- On 1 May 20X4 XYZ invests in 106 call options for Fantasy Travel Limited shares. The options have an exercise price of $56 per share, and will expire on 30 April 20X6. Price for each option is $5. Fantasy Travel Limited's shares price on 1 May 20X4 is $64. The balance sheet date for XYZ Ltd is 30 June. XYZ Ltd accounts for its financial instruments using fair value through profit and loss. Other data: Date Share Price Option price 30 June 20X4 73 19 30 June 20X5 81 27 What is the value of the options on 30 June 20X5?On January 1, 2022, Mills Corp. purchased a call option on shares of XYZ stock. Terms of the contract were as follows: Number of shares: 100 . Strike price: $120 per share Expiration date: April 30, 2022 Total cost of the option contract paid at signing: $90 .Seller of the option contract: First Investment Bank On January 1, 2022, XYZ stock was trading at $120 per share. The following additional information is known: . On March 31, 2022, the price of XYZ stock was $140 per share. A market appraisal indicated that the time value of the option contract was $70. . On April 5, 2022, the price of XYZ stock was $135 per share. A market appraisal indicated that the time value of the option contract was $60. On this date, Mills settled the option contract. Required: 1. Indicate any amounts that Mills Corp. would have included in its March 2022 quarterly financial statements related to the option contract. ed Complete this question by entering your answers in the tabs below. Req 1 Indicate any…On January 2, 2020, Ayayai Company purchases a call option for $310 on Merchant common stock. The call option gives Ayayai the option to buy 1,090 shares of Merchant at a strike price of $49 per share. The market price of a Merchant share is $49 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $53 per share, and the time value of the option is $200. Prepare the journal entry to record the purchase of the call option on January 2, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 enter an account title to record the transaction on January 2, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction on January 2, 2020 enter a debit…
- On January 1, 2022, Mills Corp. purchased a call option on shares of XYZ stock. Terms of the contract were as follows: • Number of shares: 100 • Strike price: $120 per share • Expiration date: April 30, 2022 •Total cost of the option contract paid at signing: $90 • Seller of the option contract: First Investment Bank On January 1, 2022, XYZ stock was trading at $120 per share. The following additional information is known: . On March 31, 2022, the price of XYZ stock was $140 per share. A market appraisal indicated that the time value of the option contract was $70. . On April 5, 2022, the price of XYZ stock was $135 per share. A market appraisal indicated that the time value of the option contract was $60. On this date, Mills settled the option contract. Required: 1. Indicate any amounts that Mills Corp. would have included in its March 2022 quarterly financial statements related to the option contract Complete this question by entering your answers in the tabs below. Req 1 Indicate…On 1 May 20X4 XYZ invests in 18456 call options for Fantasy Travel Limited shares. The options have an exercise price of $100 per share, and will expire on 30 April 20X6. Price premium for each option is $25. Fantasy Travel Limited's shares price on 1 May 20X4 is $132. The balance sheet date for XYZ Ltd is 30 June. XYZ Ltd accounts for its financial instruments using fair value through profit and loss. Other data: Date 30 June 20X4 30 June 20X5 30 April 20X6 Share Price 146 131 150 Option price 34 24 43 What is the value of the options at the time when XYZ Ltd exercises the options on 30 April 20X6? PLEASE ENTER YOUR ANSWER IN WHOLE NUMBERS WITH NO COMMAS OR DOLLAR SIGNS (EG $1,000,000 SHOULD BE SHOWN AS 1000000; -$1,000,000 SHOULD BE SHOWN AS -1000000).In the financial year to June 30, 2021, HIFI Ltd issued options for 400,000 shares. During that perlod, the average fair value of one ordinary share was $32 while the evercise price for the shares under option was $26. The company commenced the financial year with 940,000 ordinary shares in issue, while profit for the year amounted to $921.000. REQUIRED: Calculate BEPS and DEPS for the year.
- Maynard Corporation buys 1,000 call options to buy 1,000 shares of Rossman, Inc., common stock on December 1, 20X1. At the time of the purchase, the option price is $5.00, the Rossman stock price is $30.00, and the exercise price is $32.00. On December 31, 20X1, the option price is $5.90 and the stock price is $36.00. Identify the derivative, the underlying, and the notional value. Assume that the derivative is accounted for as a stand-alone derivative. What journal entries would Maynard Corporation make during 20X1 to record the effects of the option purchase?Today is October 31, 20XX. The shares of ARC Resources Ltd. are currently trading at $24.25 per share. One of the call options traded on ARC shares is 20XX November 25 with a bid price of $0.20 and an ask price of $0.25. What are the upper and lower bounds for this ARC call? Multiple Choice $24.25; -$0.75 $0.75; $0 $24.25; $0 $0, -$0.75 $24.25; $0.75Warren Co. purchased a put option on Echo common shares on January 7, 2020, for $360. The put option is for 400 shares, and the strike price is $85 (which equals the price of an Echo share on the purchase date). The option expires on July 31, 2020. The following data are available with respect to the put option. Date Market Price of Echo Shares Time Value of Put Option March 31, 2020 $80 per share $200 June 30, 2020 82 per share 90 July 6, 2020 77 per share 25 Instructions Prepare the journal entries for Warren Co. for the following dates. a. January 7, 2020—Investment in put option on Echo shares. b. March 31, 2020—Warren prepares financial statements. c. June 30, 2020—Warren prepares financial statements. d. July 6, 2020—Warren settles the put option on the Echo shares.
- In January 2021 you purchased 2,000 shares of BZA Ltd for $30.00 per share. Concerned that the market will turn bearish, you decide to buy 20 put options on the company’s shares with each contract written on 100 shares at an exercise (or strike) price of $30.00 expiring in July 2021 for a premium of $1.00 per share. -If at expiration the company’s share price is $28.00 calculate the total profit or loss on your hedged positionThe common shares of Twitter, Incorporated (TWTR) recently traded on the NYSE for $69 per share. You have employee stock options to purchase 1,000 TWTR shares for $74 per share. The options expire in three years. Assume that the annualized volatility of TWTR stock is 59 percent and that the interest rate is 2.7 percent. (Assume the options are European options that may only be exercised at the maturity date.) a. Is this option a call or a put? Call ○ Put b. Using an option pricing calculator such as the one at erieri.com/blackscholes, estimate the value of your TWTR options. Note: Round your intermediate calculations to 2 decimal places and final answer to nearest whole dollar. Value of your TWTR options c. What is the estimated value of the options if their maturity is six months instead of three years? Note: Round your intermediate calculations to 2 decimal places and final answer to nearest whole dollar. Value of the optionsOn January 1, 2022, Rosewood Corp. purchased a put option on shares of ICM stock. Terms of the contract were as follows: Number of shares: 100 Strike price: $200 per share Expiration date: May 31, 2022 Total cost of the option contract: $80 Seller of the option contract: First Investment Bank On January 1, 2022, ICM stock was trading at $200 per share. The following additional information is known: On March 31, 2022, the price of ICM stock was $220 per share. A market appraisal indicated that the time value of the option contract was $60. On May 10, 2022, the price of ICM stock was $185 per share. A market appraisal indicated that the time value of the option contract was $50. On this date, Rosewood settled the option contract. What is the dollar value of put option that Rosewood Corp. would have included in its March 2022 quarterly financial statements?
