Question

In: Finance

Ima Greedy, the CFO of Financial Saving Techniques has been granted options on 200,000 shares. The...

Ima Greedy, the CFO of Financial Saving Techniques has been granted options on 200,000 shares. The stock is currently trading at $23 a share and the options are at the money. The variance of the stock has been about .08 on an annual basis over the last several years. The options mature in 3 years and the risk free rate is 4%.

What is the value of a call option?

Solutions

Expert Solution

Value of 1 call option=5.6220

Value of 200000 call option=5.6220*200000=1124408.932

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Jessica Silva, the CFO of a company has been granted options 200,000 shares. The stock is...
Jessica Silva, the CFO of a company has been granted options 200,000 shares. The stock is currently trading at $22 a share and options are at the money. The variance of the stock has been about 0.07 on an annual basis over the last several years. The options mature in 3 years and the risk free rate is 4%. What is the value of a call option per share and the total for 200,000 share?
Jessica Silva, the CFO of a company has been granted options 200,000 shares. The stock is...
Jessica Silva, the CFO of a company has been granted options 200,000 shares. The stock is currently trading at $22 a share and options are at the money. The variance of the stock has been about 0.07 on an annual basis over the last several years. The options mature in 3 years and the risk-free rate is 4%. What is the value of a call option per share and the total for 200,000 share? (standard deviation is the square root...
On December 31, 20X0, Kessler Company granted six executives options for each to purchase 10,000 shares...
On December 31, 20X0, Kessler Company granted six executives options for each to purchase 10,000 shares of the company's $10 par common stock at an option price of $50 per share (a total of 60,000 options). The options become exercisable on January 1, 20X1, and represent compensation for executives' services over a three-year period beginning January 1, 20X1. The Black-Scholes option pricing model determines the option fair value to be $1. Through December 31, 20X2, none of the executives had...
On 1/1/18, ABC Corp. granted employees 200,000 stock options. Additional information is presented below: Option Price...
On 1/1/18, ABC Corp. granted employees 200,000 stock options. Additional information is presented below: Option Price $                     30 per share Share Price on 1/1/18 $                     30 per share Par Value of Stock $                       1 per share Option Value on 1/1/18 $900,000 Vesting/Service Period 3 years Expiration Date 12/31/2022 On 1/1/20, employees holding 20,000 options resigned from the company, thus forfeiting their options. On 1/1/22, 60,000 options were exercised when the market price was $45/share. On 12/31/22, the remaining options expired....
Larry has been the chief financial officer (CFO) of Maxima Auto Service for the past 10...
Larry has been the chief financial officer (CFO) of Maxima Auto Service for the past 10 years. The company has reported profits each year it's been in business. However, this year has been a tough one. Increased competition and the rising costs of labor have reduced the company's profits. On December 30, Larry informs Robert, the company's president and Larry's closest friend for the past 10 years, that it looks like the company will report a net loss (total expenses...
Answer the questions by 3 paragraphs: Larry has been the chief financial officer (CFO) of Maxima...
Answer the questions by 3 paragraphs: Larry has been the chief financial officer (CFO) of Maxima Auto Service for the past 10 years. The company has reported profits each year it's been in business. However, this year has been a tough one. Increased competition and the rising costs of labor have reduced the company's profits. On December 30, Larry informs Robert, the company's president and Larry's closest friend for the past 10 years, that it looks like the company will...
On October 1, 2018, Farmer Fabrication issued stock options for 200,000 shares to a division manager....
On October 1, 2018, Farmer Fabrication issued stock options for 200,000 shares to a division manager. The options have an estimated fair value of $6 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 2% in four years. Suppose that Farmer initially estimates that it is not probable the goal will be achieved, but then after one year, Farmer estimates that it is probable that divisional revenue will increase by 2%...
AP2-5 Larry has been the chief financial officer (CFO) of Maxima Auto Service for the past...
AP2-5 Larry has been the chief financial officer (CFO) of Maxima Auto Service for the past 10 years. The company has reported profits each year it's been in business. However, this year has been a tough one. Increased competition and the rising costs of labor have reduced the company's profits. On December 30, Larry informs Robert, the company's president and Larry's closest friend for the past 10 years, that it looks like the company will report a net loss (total...
An investment project has the following cash flows: CFO = -1,000,000; C01 - C08 = 200,000...
An investment project has the following cash flows: CFO = -1,000,000; C01 - C08 = 200,000 each • If the required rate of return is 12%, what decision should be made using NPV? • How would the IRR decision rule be used for this project, and what decision would be reached? • How are the above two decisions related? NOTE: do it on exal
1a. If you were a Chief Financial Officer (CFO), please identify the five tools/techniques learned in...
1a. If you were a Chief Financial Officer (CFO), please identify the five tools/techniques learned in management accounting that can be used in your company? Please also briefly explain why. 1b. The sales budget is provided below for the product of Company ABC. Jan 10,000 units Feb 40,000 units Mar 50,000 units Apr 60,000 units May 40,000 units Finished goods at the end of each month must be 20% of the next month’s budgeted sales. On Dec 31 of the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT