You bought a call contract three weeks ago. The expiry date of the calls is five weeks
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You bought a call contract three weeks ago. The expiry date of the calls is five weeks from today. On that date, the price of the underlying stock will be either 120 or 95. The two states are equally likely to occur. Currently, the stock sells for 96 . The exercise price of the call is 112. Each call gives you the right to buy 100 shares at the exercise price. You are able to borrow money at \(10 \%\) per annum. What is the value of your call contract?
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Related Book For
Lectures On Corporate Finance
ISBN: 9789812568991
2nd Edition
Authors: Peter L Bossaerts, Bernt Arne Odegaard
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