What is the price of the call option

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Reference no: EM131605912

A. A call option matures in 6 month. The underlying stock price is $50 and the standard deviation of tocks return is 14 percent per year. The risk free rate is 5% per annum.

The exercise price is $60. What is the price of the call option? ( Show all workings)

B. Fill in the blanks with the correct terms which relates to option contracts.

1. The rights to sell an underlying asset is known as a ___________ option?

2. If the options contract allows you to exercise it only on the maturity date, it is know as a __________ option.

3. The price at which an option seller sell you an option contract is known as option___________.

4. Intrinsic value lus time value is equal to ____________ value of the option.

5. When you buy a share of stock and buy a put otion on the same share of stock it is known as ______________.

Reference no: EM131605912

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