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You are considering buying a Call Option on XYZ Company stock. XYZ Company stock is currently at $75 per share, and you predict that it
You are considering buying a Call Option on XYZ Company stock. XYZ Company stock is currently at $75 per share, and you predict that it will be $50 or $100 in one year. Call Option will support you for XYZ Company stock in buying one year for $65. Based on this information, answer the following questions: A. What is the value of the Call Option if the risk-free interest rate is 3%? B. Give your analysis of the relationship between buying an option with the risk of the company.
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