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Price the 318 day put and call options with a strike price of $275 over a stock currently trading at $287.38, which is expected to
Price the 318 day put and call options with a strike price of $275 over a stock currently trading at $287.38, which is expected to pay a dividend in 135 days time of $6.54 and another dividend in 317 days of $6.72, that has a volatility of 38.50%pa, when the continuously compounded risk free rate is 0.75%.
a) What is the intrinsic value of these options?
b) What is the time value of these options?
c) What would be the value of these options in 23 days time if the stock were trading at $281.66?
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