Calculating option values the price of dimension, Inc., stock will be either $65 or $85 at the

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Calculating option values the price of dimension, Inc., stock will be either $65 or $85 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 5 percent.

a. Suppose the current price of Dimension stock is $75. What is the value of the call option if the exercise price is $45 per share?

b. Suppose the exercise price is $70 in part (a>. What is the value of the call option now?

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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th Edition

Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan

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Question Posted: May 03, 2011 03:29 AM

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Calculating option values the price of dimension, Inc., stock will be either $65 or $85 at the

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Fundamentals of Corporate Finance

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