Question
A call option has an exercise price of $10.00 and an expiry date in six months. The underlying stock is currently trading for $12.00. Required:
A call option has an exercise price of $10.00 and an expiry date in six months. The underlying stock is currently trading for $12.00.
Required:
a) What is the minimum price an investor would pay for this option? Could an investor profit if the call option was actually trading at $1.00? (5 marks)
b) What is the maximum price an investor would pay for this option?
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Investment Analysis And Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown
9th Edition
0324656122, 978-0324656121
