Question
The price of Build A Fire Corp. stock will be either $86 or $119 at the end of the year. Call options are available with
| The price of Build A Fire Corp. stock will be either $86 or $119 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 5 percent. |
| a. | Suppose the current price of the company's stock is $97. What is the value of the call option if the exercise price is $85 per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Value of the call option___________? |
| b. | Suppose the exercise price is $115 and the current price of the company's stock is $97. What is the value of the call option now? |
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Accounting Comes Alive The Color Accounting Parable
Authors: Mark Robilliard ,Peter Frampton, Chang Chang, Mark Morrow, John Gorman
1st Edition
1450769608, 978-1450769600
