The price of Cilantro, Inc., stock will be either $70 or $90 at the end of the
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The price of Cilantro, Inc., stock will be either $70 or $90 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 6 percent.
a. Suppose the current price of the company’s stock is $80. What is the value of the call option if the exercise price is $60 per share?
b. Suppose the exercise price is $65 in part (a). What is the value of the call option now?
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
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