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The price of a stock is $42, and a six-month call with a strike price of $38 sells for $10. Round your answers to the
The price of a stock is $42, and a six-month call with a strike price of $38 sells for $10. Round your answers to the nearest dollar.
Problem 28-03 The price of a stock is $42, and a six-month call with a strike price of $38 sells for $10. Round your answers to the nearest dollar. a. What is the option's intrinsic value? $ b. What is the option's time premium? $ C. If the price of the stock rises, what happens to the price of the call? As the price of the stock rises, the value of the call -Select- d. If the price of the stock falls to $39, what is the maximum you could lose from buying the call? Enter your answer as a positive value. $ e. What is the maximum profit you could earn by selling the call uncovered (naked)? $ f. If, at the expiration of the call, the price of the stock is $38, what is the profit (or loss) from buying the call? Enter your answer as a positive value. The - Select from buying the call is $ g. If, at the expiration of the call, the price of the stock is $38, what is the profit (or loss) from selling the call naked? Enter your answer as a positive value. The -Select- from selling the call naked is $ h. If, at the expiration of the call, the price of the stock is $49, what is the profit (or loss) from buying the call? Enter your answer as a positive value. The -Select- from buying the call is $ i. If, at the expiration of the call, the price of the stock is $49, what is the profit (or loss) from selling the call naked? Enter your answer as a positive value. The -Select from selling the call naked is $Step by Step Solution
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