Purchase call option costing

Assignment Help Financial Management

Reference no: EM131931884

Assume that you purchase a call option costing $10/share which would allow you to purchase 100 shares of stock at a strike price of $90. If, at the exercise date, the stock was trading at $115, would you exercise the option? What would be your return? What about if the stock was trading at $95 on the exercise date?

Reference no: EM131931884

Questions Cloud

Which is the better investment after five years : If both funds’ portfolios have an average return of 12%, which is the better investment after 5 years given an initial investment of $5,000?

Constraint the payments of dividends : What are the 3 variables that can constraint the payments of dividends?

What would be holding period return for the investor : Assume that the yield to maturity falls to 7% after one year, and the investor decides to sell the bond. What would be holding period return for the investor?

What is estimate of the stock current price : The company's stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock's current price?

Purchase call option costing : Assume that you purchase a call option costing $10/share which would allow you to purchase 100 shares of stock at a strike price of $90.

Use for the debt in order to compute the firm wacc : Why does Shapiro argue that board members should not be outsiders? What weight should we use for the debt in order to compute the firm's WACC?

What would be your percentage return on investment : What would be your percentage return on investment if you bought when rates were 12 percent and sold when rates were 4 percent?

Company stock price is going to decline from current level : Suppose you believe that Ace Company's stock price is going to decline from its current level of $80.50 sometime during the next 5 months.

What is the after-tax cost of debt for bonds : If investors are willing to pay $1,025 for each of the bonds, what is the after-tax cost of debt for bonds?

User Account

All Pages