What is the intrinsic value of the option

Reference no: EM132064750

Question: A put option has an exercise price of $40 and the call premium is $5. The current market price of the underlying stock is $38.

A. Is the option in the money or out of the money?

B. What is the intrinsic value of the option? The time value?

C. What is the break-even stock price on the option's expiration date?

D. If you purchase this option, what is your maximum possible gain?

Reference no: EM132064750

Questions Cloud

What is the purpose of tranching in securitization : What is the purpose of tranching in securitization? I know it means setting different levels of priority to the bonds. The lowest rated bonds would absorb.

Unless far out-of-the money or far in-the-money : Unless far out-of-the money or far in-the-money, for otherwise identical call options, the longer the term to expiration, the lower the price for

What two differences would you observe : If you compared histograms of large-company stocks versus small- company stock , what two differences would you observe?

Determine what is the current stock price : A put option and a call option with an exercise price of $55 and three months to expiration sell for $1.20 and $5.30, respectively.

What is the intrinsic value of the option : A put option has an exercise price of $40 and the call premium is $5. The current market price of the underlying stock is $38.

What is the expected value of target company : The discount rate is estimated to be 14 percent during the high growth period. What is the expected value of Target Company?

What would the annual yield to maturity be on the bond : A few years ago, Spider Web, Inc. issued bonds with a 11.65 percent annual coupon rate, paid semiannually.

What is the relationship between authentic leadership : What is the relationship between authentic leadership, Leader-Member Exchange (LMX) and employees' Psychological Capital (PsyCap)?

What is your monthly mortgage payment : You are purchasing a new house at $500,000 in Cincinnati.You're making the purchase with an initial deposit of $200,000 and the rest with a 30-year fixed rate.

User Account

All Pages