Question
The price of Chive Corp. stock will be either $75 or $95 at the end of the year. Call options are available with one year
The price of Chive Corp. stock will be either $75 or $95 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 6 percent. Suppose the current price of the company's stock is $80.
a. What is the value of the call option if the exercise price is $70 per share?
b. Suppose the exercise price is $90 in requirement 1. What is the value of the call option now?
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert Hughes
4th Edition
0256147175, 978-0256147179
