Answered step by step
Verified Expert Solution
Question
1 Approved Answer
XYZ Inc has purchased 306 call options on the shares of ABC Corp with each option giving XYZ Inc the right to buy one ABC
XYZ Inc has purchased 306 call options on the shares of ABC Corp with each option giving XYZ Inc the right to buy one ABC Corp common share at a strike price of $82.50 per share. XYZ paid $2.89 for each option. Two months later, on the next financial reporting date, the market value of each option is $8.39 per option, while each ABC Corp share is trading at $89.75 per share. XYZ exercises all the options immediately after this financial reporting date and then also immediately sells all shares acquired as a part of the option exercise. What will be the absolute value of the change in XYZ's cash balance following these transactions immediately after the financial reporting date? Ignore any commissions. O a. $2,219 O b. $2,163 O c. $2,052 O d. $2,108 O e. $1,997
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started