Reference no: EM131177197
The price of a stock is $56. You can buy a six-month call at $55 for $4 or a six-month put at $55 for $2.
a. What is the intrinsic value of the call? Round your answer to the nearest dollar. $
b. What is the intrinsic value of the put? Round your answer to the nearest dollar. $
c. What is the time premium paid for the call? Round your answer to the nearest dollar. $
d. What is the time premium paid for the put? Round your answer to the nearest dollar. $
f. What is the maximum you could lose by selling the call covered? Round your answer to the nearest dollar. $
g. What is the maximum possible profit if you sell the stock short? Round your answer to the nearest dollar. $
After six months, the price of the stock is $63.
h. What is the value of the call? Round your answer to the nearest dollar. $
i. What is the profit or loss from buying the put? Round your answer to the nearest dollar. $
j. If you had sold the stock short six months earlier, what would your profit or loss be? Round your answer to the nearest dollar. $
k. If you had sold the call covered, what would your profit or loss be? Round your answer to the nearest dollar. $a
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