Question
As a finance manager in a company, you considering purchasing a call option on the stock of Crude Oil Company. Currently Crude Oil Company stock
As a finance manager in a company, you considering purchasing a call option on the stock of Crude Oil Company. Currently Crude Oil Company stock trades for $700 per share, and you predict that its price will be either $500 or $1000 in one year. The call option would enable you to buy a share of Crude Oil Company stock in one year for $600. What is this option worth if the risk-free rate is 5%?
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
7th Edition
1473778913, 978-1473778917
