In: Finance
The price of Build A Fire Corp. stock will be either $67 or $95 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 5 percent. |
a. |
Suppose the current price of the company's stock is $75. What is the value of the call option if the exercise price is $65 per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Value of the call option | $ |
b. |
Suppose the exercise price is $90 and the current price of the company's stock is $75. What is the value of the call option now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Value of the call option | $ |