Question
You are evaluating a stock that is currently selling for $30 per share. Over the investment period you think that the stock price might get
You are evaluating a stock that is currently selling for $30 per share. Over the investment period you think that the stock price might get as low as $25 or as high as $40. There is a call option available on the stock with an exercise price of $35. Answer the following questions about hedging your position in the stock. Assume that you will hold one share. The interest rate is 6%.
a) (5 points) Show the net payoff to your portfolio in the table below.
scenario | low stock price | high stock price |
value of stock at year end | ||
value of call position | ||
total |
b) (5 points) What must the price of one call option be?
The above is the unanswered parts of the following
https://www.chegg.com/homework-help/questions-and-answers/evaluating-stock-currently-selling-30-per-share-investment-period-think-stock-price-might--q42858860
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