What is the intrinsic value of an rwj corp call option

Assignment Help Financial Management

Reference no: EM132043012

Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $78.

Call Put

Option Expiration strike price Vol. Last Vol. Last

RWJ Mar 72 248 5.00 178 5.10

Apr. 72 188 10.85 145 9.85

Jul. 72 157 11.70 61 13.55

Oct. 72 78 12.60 29 12,25

a-1 Are the call options in or out of the money?

a-2 What is the intrinsic value of an RWJ Corp. call option? Intrinsic value $ --------------------

b-1 Are the put options in or out of the money?

b-2 What is the intrinsic value of an RWJ Corp. put option? Intrinsic value $ ------------------------

c-1 Two of the options are clearly mispriced. Which ones?

c-2 What is the arbitrage profit you could make on each of the mispriced options? (Round your answers to 2 decimal places, e.g., 3 2.16.)

Mispriced option Profit

Mar call $ --------------------------

Oct Put $ -----------------------------

Reference no: EM132043012

Questions Cloud

What are the uses of balance of payments data : What are the uses of Balance of Payments data? Is the trade balance sensitive to exchange rates? Are exchange rates sensitive to the current account?

What information does the alpha provide an investor : What is CAT's alpha? What information does the alpha provide an investor? Interpret the alpha in terms of magnitude and significance.

Identity in human adults : How does pre-natal sex hormone exposure influence gender identity in human adults and do you think this has something to do with sexual preference?

Theoretical models in psychology : There are many theoretical models in psychology. If a clinician were to recommend medications in addition to therapy, which model would it most likely match?

What is the intrinsic value of an rwj corp call option : What is the arbitrage profit you could make on each of the mispriced options? (Round your answers to 2 decimal places, e.g., 3 2.16.)

Partially separate from brain function : Do you think human consciousness is a phenomenon that is totally or partially separate from brain function (dualist view)

Identify how your company manages its foreign currency : Identify how your company manages its foreign currency exposure. What strategies does it use? Explain how currency rates affect the Firm's business.

Conditions of the independent variable : Define a survey that could be analyzed by one-way ANOVA with three conditions of the independent variable?

Devise an investment plan for your uncle that maximizes : Devise an investment plan for your uncle that maximizes the value of the investment account at the end of five years.

User Account

All Pages