What is value of call option

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Reference no: EM131913539

The price of Build A Fire Corp. stock will be either $54 or $87 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 2 percent.

a. Suppose the current price of the company's stock is $63. What is the value of the call option if the exercise price is $50 per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Value of the call option $

b. Suppose the exercise price is $80 and the current price of the company's stock is $63. What is the value of the call option now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Value of the call option $

Reference no: EM131913539

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