The common stock of Teledyne trades on the NYSE. Teledyne has never paid a cash divi- dend. The stock is relatively risky. Assume that the beta for Teledyne is 1.3 and that Teledyne closed at a price of $162. Hypothetical option quotes on Teledyne are as follows:

Based on the Teledyne data, answer the following questions:

1. Which calls are in the money?

2. Which puts are in the money?

3. Why are investors willing to pay 1.25 for the April 180 call but only 1 for the April 150 put, which is closer to the current market price?

4. Calculate the intrinsic value of the April 140 and the October 170 calls.

5. Calculate the intrinsic value of the April 140 and the October 170 puts.

6. Explain the reasons for the differences in intrinsic values.

Call Put Strike Price Apr Oct Apr ul Oct 140 150 1 60 170 180 r not traded: sno option offered. 23.5 0.375 25 20 3.25 3.75 8.875 10 1.25 5.25 20