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Old MathJax webview has purchased call option on the equity share of Birla company for Rs 5. It has a presenfollowing range of Rs 90

Old MathJax webview

has purchased call option on the equity share of Birla company for Rs 5. It has a presenfollowing range of Rs 90 to 170 with varying probabilities.t market price per share of Rs 112 exercise of Rs 120.price At the end of 4 months, the investor expects the price of share to be in the

Expecte price

Probability

Rs 10066

0.10

Rs 11660

0.25

From the above, you are required to answer the following:

Rs 12500

0.030

Rs 15066

0.000725

Rs 0.5170

0.10443

1. What value of call option at its expiration (G) if the expected value of share price prevailsis the expected value of share price 4-months hence? What is the at the end of 4 months?

2. Determine Why does it differ from the optionthe expected value of option price at maturity, assuming that the call time. value determined in part (0?hom so wie

option is held to this

3. What market value of the call option in relation to its theoretical valueis the theoretical value of the option, at the bhi beginning of ? Give 4 months comments on the . bound plus.

has purchased call option on the equity share of Birla company for Rs 5. It has a presenfollowing range of Rs 90 to 170 with varying probabilities.t market price per share of Rs 112 exercise of Rs 120.price At the end of 4 months, the investor expects the price of share to be in the

Expecte price

Probability

Rs 10066

0.10

Rs 11660

0.25

From the above, you are required to answer the following:

Rs 12500

0.030

Rs 15066

0.000725

Rs 0.5170

0.10443

1. What value of call option at its expiration (G) if the expected value of share price prevailsis the expected value of share price 4-months hence? What is the at the end of 4 months?

2. Determine Why does it differ from the optionthe expected value of option price at maturity, assuming that the call time. value determined in part (0?hom so wie

option is held to this

3. What market value of the call option in relation to its theoretical valueis the theoretical value of the option, at the bhi beginning of ? Give 4 months comments on the . bound plus.

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