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Problem 1. Assume that you have purchased 1 call option contract on Arizona Tea Co. stock with an exercise price of $45. At that time
Problem 1. Assume that you have purchased 1 call option contract on Arizona Tea Co. stock with an exercise price of $45. At that time the stock was trading for $48.10 per share and the option price was 7.15 per share. On the expiration date, the stock is selling for $59.90 a share. Show your work below and label your answers. (10 points) A. How much will it cost you to purchase this option, in total? B. What is the intrinsic value of the option, per share, at the time of purchase? C. What is the payoff to the option holder at expiration? Based on the price at expiration, what is the total gain or loss on this investment? D. What is the profit or loss on your option investment, in percent
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