Question
The price of Ervin Corp. stock will either be $61 or $90 at the end of the year. Call options are available with one year
The price of Ervin Corp. stock will either be $61 or $90 at the end of the year. Call options are available with one year until expiration.Continuously compoundedT-bills currently yield 5.07 %. Suppose the current price of Ervin stock is $76.
What is the value of the call option, using therisk-free approach, if the strike price is $75 per share? (Round answer to 2 decimal places. Do not round intermediate calculations).
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
13th edition
978-1285027371, 128502737X, 978-1133541141
