Vince, a Speculator, Expects Interest Rates to Increase and Purchases

question 21

Multiple Choice

Vince, a speculator, expects interest rates to increase and purchases a put option on Treasury bond futures with an exercise price of 95-32. The premium paid for the put option is 2-36. Justprior to the expiration date, the price of the Treasury bond futures contract is valued at 93-22. Vince exercises the option and closes out the position by purchasing an identical futures contract. Vince's net gain from this speculative strategy is $____.

• A) -406.25
• B) 4,718.75
• C) -4,718.75
• D) -812.50
• E) none of the above

Calculate the number of shares required to be sold in a rights offering or public issue to meet a specific financial goal.

Identify the various types of offerings and underwriting processes used in the finance industry.

Understand the role and implications of underwriting fees in the process of issuing new shares.

Analyze the impact of new share issuance on existing shareholders' ownership percentages.

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Definitions:

Promise

An assurance given by one party to another agreeing to do or not do something in the future.

Agreement in Principle

An initial acceptance indicating a preliminary agreement before the details are finalized.

Binding Contract

An agreement between two or more parties that is legally enforceable in a court of law.

Verbal

Pertaining to words or spoken communication, often used in the context of agreements or contracts.