Assume CSC Stock Is Selling at $40 in June and Hal

question 69

Essay

Assume CSC stock is selling at $40 in June and Hal places a collar on 1,000 shares of CSC stock by buying a protective put and simultaneously writing a covered call. Hal intends to sell the stock in December regardless of its price.
$$\begin{array} { | l | l | l | l | } \hline \text { Option } & \text { Strike Price } & \text { Expiration } & \text { Premium } \\\hline \text { Put } & \$ 35 & \text { December } & \$ 1.05 \\\hline \text { Call } & \$ 45 & \text { December } & \$ 1.20 \\\hline\end{array}$$ (a) What net amount did Hal pay or receive when he entered the collar?
(b) If CSC is selling at $47.50 at expiration, find Hal's cash flow at expiration.
(c) If CSC is selling at $30 at expiration, find Hal's cash flow at expiration.

Determine inventory investment given beginning and ending inventory levels.

Assess the profitability of borrowing for investment purposes based on different interest rates.

Evaluate the acceptability of an investment or borrowing opportunity under various financial conditions.

Compute gross investment based on expenditures, inventory changes, and depreciation.

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Definitions:

Nurture

The process of caring for and encouraging the growth or development of someone or something, often contrasted with innate or genetic factors.

Negative Correlation

A relationship between two variables where one variable increases as the other decreases, or vice versa.

Food Intake

The consumption of nutrition and calories through eating and drinking; an essential aspect of maintaining energy and health.

Hunger

The physical sensation or condition of wanting or needing to eat food.