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In: Finance
Problem 24-4 Calculating Option Values The price of Chive Corp. stock will be either $102 or...
Problem 24-4 Calculating Option Values
|
The price of Chive Corp. stock will be either $102 or $132 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent. |
| a. |
Suppose the current price of the company's stock is $110. What is the value of the call option if the exercise price is $90 per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| b. | Suppose the exercise price is $125 and the current price of the company's stock is $110. 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.) |
Solutions
Expert Solution
Solution a>
The value of the call is $23.529
The solved excel sheet along with the formula sheet is given below.
The formula used are:
Solution b>
The value of the call is $2.8
The solved excel sheet along with the formula sheet is given below.
The formula used are:
Note: Give it a thumbs up if it helps! Thanks in advance!
jeff jeffy answered 1 year agoRelated Solutions
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Group of answer choices
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$93.52995844. — Options mature after T = 6 months and have an
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The price of Chive Corp. stock will be either $70 or $90 at the end of...
The price of Chive Corp. stock will be either $70 or $90 at the
end of the year. Call options are available with one year to
expiration. T-bills currently yield 6 percent.
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?
Suppose the exercise price is $85 in requirement 1. What is the
value of the call option now?
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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.)
b.
Suppose the exercise price is...
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a.
Suppose the current price of the company's stock is $77. What is
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your answer to 2 decimal places, e.g., 32.16.)
b.
Suppose the exercise price is...
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Suppose the current price of the stock is $99. What is the value
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Problem 24-3 Calculating Payoffs [LO1] Use the option quote information shown here to answer the questions...
Problem 24-3 Calculating Payoffs [LO1]
Use the option quote information shown here to answer the
questions that follow. The stock is currently selling for $41.
Calls
Puts
Strike
Option
Expiration
Price
Vol.
Last
Vol.
Last
Macrosoft
Feb
43
99
1.63
54
2.63
Mar
43
75
1.87
36
3.04
May
43
36
2.15
25
3.46
Aug
43
17
2.36
17
3.50
a.
Suppose you buy 24 contracts of the February 43 call option. How
much will you pay, ignoring commissions?
...
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