The total cost (TC) and inverse demand equations for a monopolist are: TC=100+5Q^2 P=200?5Q

a. What is the profit-maximizing quantity?

b. What is the profit-maximizing price?

c. What is the monopolist's maximum profit?

The demand equation for a product sold by a monopolist is Q=25?0.5P TC=225+5Q+0.25Q^2

a. Calculate the profit-maximizing price and quantity.

b. What is the monopolist's profit?

The market value for the JPM stock is $120 dollars. A6-month call option contract on JPM stock with a strike price of $140is traded at $4. In addition, a 6-month put option contract on JPM stock with strike price of $100 is traded at $4.Suppose you take a long position in the call and a long position in the put.

What is the cost of this strategy?

Draw the payoff diagram (or P/L diagram) of this strategy.

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share.

a. How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position?

b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position?

Consider a call option with an exercise price of $110 and one year to expiration. The underlying stock pays no dividends, its current price is $110, and you believe it has a 50% chance of increasing to $120 and a 50% chance of decreasing to $100. The risk-free rate of interest is 10%

What is the hedge ratio?

What is the value of the riskless (perfectly hedged) portfolio one year from now?

What is the value of the call option ?

The following relates to the Lerner Index.

Which of the following statements is (are) true?

A local manufacturer uses 2,000 electronic switches boxes a year. Carrying costs are 23% of the cost of the switch per year, and ordering costs are $15 per order. The following price schedule applies. What is the optimal order quantity? Show all total costs calculations and explain your answer.

Number of Switches               Price per Switch

0 - 99                                          $17.50

100 - 999                                     $17.00

1000 or more    $16.50

Green Lake Corp. has 10 million shares outstanding with a market price of $25 per share and no debt. The company marginal tax rate is 40%. The CFO of Green Lake plans to issue a $100 million debt and use the proceeds to repurchase the outstanding shares. Assume that Green Lake prepares to repurchase the existing shares from the open market at $25 per share. What will the new share price be after the repurchase?

The following two equations are the demand equations for airplane trips for a business person and a vacationer, respectively. The airlines’ marginal cost is $20 per passenger.

? =620−100? ,and

? =180−40? ""

1. What price should the airlines charge each person if the firm’s objective is to maximize profit?

2. Does this pricing make sense? To answer this, calculate the price elasticity of demand for each customer type. Whose demand is more elastic? Explain your response.

Suppose it is September and a speculator consider that a stock is likely to decrease in value over the next three months. The stock price is currently $100, and a three-month put option with a strike price of $99 is currently selling for $5.00 per share. • create a table which compares selling short 2000 shares of stock and buying a put option written on 2000 shares of stock. Use December stock prices of $85 and $115.