The price of Chive Corp. stock will be either $64 or $98 at the end of...

The price of Chive Corp. stock will be either $64 or $98 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 $77. What is the value of the call option if the exercise price is $60 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 $95 and the current price of the company's stock is $77. 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.)

Expert Solution

jeff jeffy answered 1 year ago

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