Question
The price of Tara, Inc. stock will be either $60 or $80 at the end of the year. Call options are available with one year
The price of Tara, Inc. stock will be either $60 or $80 at the end of the year. Call options are available with one year to expiration. T-Bills currently yield 5%.
a) Suppose the current price of Tara stock is $70. What is the value of the call option if the exercise price is $45 per share?
b) Suppose the exercise price is $70 in part (a). What is the value of the call option now?
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Essentials Of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
12th Edition
1260772160, 978-1260772166
