What conditions does the holder of the option make profit

Assignment Help Financial Management

Reference no: EM13914943

Suppose a European call option to buy a share for $100.00 costs $5.00. The stock currently trades for $97.00. If the option is held to maturity under what conditions does the holder of the option make a profit? Note: ignore time value of money.

A) When the price of the stock is greater than $102.

B) When the price of the stock is greater than $105.

C) When the price of the stock is greater than $100.

Reference no: EM13914943

Questions Cloud

Should the vice president consider closing any of the stores : The number of customers for a randomly selected week was collected. Should the vice president consider closing any of the stores based on daily patronage? Does a certain day of the week have any effect on the average number of customers

Explain the dilemma that advanced nations might have faced : Explain the dilemma that advanced nations might have faced as they debated the ratification of the Kyoto Protocol, once the United States withdrew from the agreement.

About the bonus versus stock : The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why? What are the advantages and disadvantages o..

When does the investor make a profit : An investor buys a European put on a share for $3. The stock price is currently $42 and the strike price is $40. When does the investor make a profit?

What conditions does the holder of the option make profit : Suppose a European call option to buy a share for $100.00 costs $5.00. The stock currently trades for $97.00. If the option is held to maturity under what conditions does the holder of the option make a profit? Note: ignore time value of money.

Summarize robert solow view of using substitutability : Summarize in your own words Robert Solow's view of using substitutability in applying intergen- erational equity to environmental policy. Do you agree with this view? Why or why not?

Could cashier issue ticket to friend without taking in cash : Could the cashier issue a ticket to a friend without taking in cash? Could the ticket taker allow friends to enter without a ticket? If so, how might they be caught?

Question regarding the linux flavors : Look up the different types of Linux and Unix and type up a 1 page listing them out what benefits do each have and where you found the OS at.

Importing goods and maximizing value for shareholders : Felicia & Fred’s board has hired a new Chief Operating Officer (COO) to assist them in expanding their operations globally. A close friend of Fred’s from childhood, the new COO, has extensive experience in importing goods and maximizing value for sha..

User Account

All Pages