Question
The price of Tara, Inc., stock will be either $68 or $90 at the end of...
|
The price of Tara, Inc., 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? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 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? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Call value |
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Answer #1
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