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What is the value of the option

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Reference no: EM132691087

Your employer is offering you stock options on the firm as part of your pay package. You know the following about this offer:
Current Stock Price $25
Exercise Price $35
Maturity (yrs) 2
Risk-free Rate 4.5%
Stock Volatility 30%
What is the value of the option? Suppose the Fed reduces Treasury rates to 4.0%, what is the new price of the option? Your company's share price falls to $23, what is the new price of the option?

Reference no: EM132691087

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