The speculative premium on the call option

Assignment Help Financial Management

Reference no: EM13947571

Assume that a stock is selling for $47 with options available at 20, 30, and 40 strike prices. The 40 call option is at 7 1/2. Calculate the following:

(a) The intrinsic value of the $40 call

(b) Is the call in the money?

(d) The percent the speculative premium represents of the common stock price.

Reference no: EM13947571

Questions Cloud

Planning to purchase light commuter aircraft within one year : The airline is planning to purchase light commuter aircraft within one year. These will be used on short flights to small, regional centres. They require that the design of the system be flexible enough to accommodate light commuter aircraft with ..

Thinking about replacing an old computer with a new one : Suppose we are thinking about replacing an old computer with a new one. The old one cost us $1,400,000; the new one will cost, $1,660,000. The new machine will be depreciated straight-line to zero over its five-year life.

What will be your overall gain or loss : Assume you sell 100 shares of Larson Corporation short at $61. You also buy a 60 call option for $3.5 to protect against the stock price going up. If the stock ends up at $80, what will be your overall gain or loss? If the stock ends up at $40, what ..

The speculative premium on the call option : Assume that a stock is selling for $47 with options available at 20, 30, and 40 strike prices. The 40 call option is at 7 1/2. Calculate the following: The intrinsic value of the $40 call. Is the call in the money? The speculative premium on the 40 c..

Expression for the time needed to melt : If the outer surface of the wall is heated to a temperature T1 > Tf to melt the ice, obtain an expression for the time needed to melt the entire mass of ice and, in turn, deliver cooling water to, and energize, the fuel cell.

Construct an artifact to send to outer-space : The Messaging Intelligent Life project consists of two parts. Construct an artifact to send to outer-space with the goal of contacting and eliciting a response from an intelligent life

Organized into departments by functions : Companies are often organized into departments by functions, such as operations, marketing, sales, corporate headquarters, etc. Typically, each one of these departments is then assigned specific responsibilities and referred to as either a cost ce..

What are the fair value standards : How has fair value accounting challenged leveraged instruments - what are the fair value standards that need to be followed in the U.S. under GAAP and internationally under IFRS?

User Account

All Pages