Question
The price of Build A Fire Corp. stock will be either $61 or $86 at the end of the year. Call options are available with
The price of Build A Fire Corp. stock will be either $61 or $86 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent. |
a. | Suppose the current price of the company's stock is $70. What is the value of the call option if the exercise price is $60 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 $80 and the current price of the company's stock is $70. What is the value of the call option now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Value of the call option | $ |
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