What is the value of the call option

Assignment Help Finance Basics
Reference no: EM132081294

The stock will be either $68 or $90 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 6 percent.

a. Suppose the current price of the company's stock is $79. What is the value of the call option if the exercise price is $64 per share? (32.16.)

Call value $  

b. Suppose the current price of the company's stock is $79. What is the value of the call option if the exercise price is $74 per share? (32.16.)

Call value $

Reference no: EM132081294

Questions Cloud

What is the value of stock : You expect the dividends to grow at the constant rate of 5% afterwards. If your required return is 12%, what is the value of this stock?
Practice of public health : Brief description of the significance of why this disease is important for examination - you have the opportunity to share the significance of your results
Create an application that declares a class : Declare and implement one friend function in such way that, you shouldn't be able to modify, but only read the class attributes.
Explain briefly the components of balance sheet : Explain what does balance sheet show about a company? Explain briefly the components of balance sheet?
What is the value of the call option : Suppose the current price of the company's stock is $79. What is the value of the call option if the exercise price is $64 per share? (32.16.)
Write a simple line editor : Write a simple line editor. Keep the entire text in an ArrayList object, one line in a separate index position.
Appropriate time to harvest the entire crop of shrimp : Describe how you would determine the appropriate time to harvest the entire crop of shrimp.
What is its book value per share : The company has 1.5 million shares of common stock outstanding. What is its book value per share?
What should be the increase in operating income : Cayman has a 35% marginal tax rate. If Cayman's sales increase 7%, what should be the increase in operating income?

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute the annual rate on the real bond

A real-estate property is expected to yield 2% per quarter (nominal) with a SD of the (effective) quarterly rate of 10%.

  A company pays a constant annual dividend of 160 a share

a company pays a constant annual dividend of 1.60 a share and currently sells for 28.50 a share. what is the rate of

  Nominal required return on risk-free government securities

a. What is the UK's inflation rate if the equilibrium relationships hold? b. What is the UK's nominal required return on risk-free government securities?

  How much maintenance cost should be allocated to department

How much maintenance cost should be allocated to the department B for March?

  The company then expects to settle down to a

givens inc. is a fast growing technology company that paid a 1.25 dividend last week. the companys expected growth

  Calculate the market value of bond today

Assume also that the bond pays interest semi-annually, rather than annually. Given this new information, calculate the market value of this bond today at t = 0.

  The timberlake-jackson wardrobe company has 10 percent

the timberlake-jackson wardrobe company has 10 percent coupon bonds on the market with nine years left to maturity.

  Post company began the current month with 10000 in

1 the 200x records of thompson company showed beginning inventory of 6000 cost of goods sold of 14000 and ending

  What will be the bond new price

Consider a five-year, 15 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 12 percent.

  What quarterly compounding apr must an account have

What quarterly compounding APR must an account have for a depositor to be indefferent between a 10% APR with monthly compounding and the account with quarterly compounding?

  Calculate roi and eva

ELN Waste Management has a subsidiary that disposes of hazardous waste and a subsidiary that receives and disposes of residential garbage.

  Mead motors purchases an automobile

Mead Motors purchases an automobile for its new car inventory from Generous Motors which finances this transaction through its financial subsidiary, Generous Motors Credit Company. Mead pays no funds to Generous Motors or GMCC untilj it sells the aut..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd