What are the option’s market value and the stock’s current price?

The exercise price on one of Boudreaux Company’s call options is $14, its exercise value is $20, and its premium is $5. What are the option’s market value and the stock’s current price?

Expert Solution

Stock's current price is the addition of exercise value and strike price .

Options market price is the sum of Exercise value and premium .

STOCK'S CURRENT PRICE = EXERCISE VALUE + STRIKE PRICE

= $20 + $14 =$34

OPTIONS MARKET VALUE = EXERCISE VALUE + PREMIUM

= $ 20 + $5

= $ 25

STOCK'S CURRENT PRICE IS $34 AND OPTIONS MARKET VALUE IS $25

Shaik sultan answered 3 years ago

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