Question

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? |

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? |

Call value |

Answer #1

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The price of Tara, Inc., stock will be either $66 or $88 at the
end of the year. Call options are available with one year to
expiration. T-bills currently yield 5 percent.
a.
Suppose the current price of the company's stock is $77. What is
the value of the call option if the exercise price is $62 per
share? (Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
Call value
$
...

The price of Profile, Inc., stock will be either $67 or $89 at
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expiration. T-bills currently yield 4 percent.
a.
Suppose the current price of the stock is $78. What is the value
of the call option if the exercise price is $63 per share?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
b.
Suppose the current price of...

The price of Chive Corp. stock will be either $67 or $91 at the
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expiration. T-bills currently yield 4 percent.
a.
Suppose the current price of the company’s stock is $75. What
is the value of the call option if the exercise price is $70 per
share? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
b.
Suppose the current price of...

The price of Ervin Corp. stock will be either $54 or $87 at the
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expiration. T-bills currently yield 2 percent.
a.
Suppose the current price of the 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.)
b.
Suppose the exercise price is...

A stock is currently selling for $74 per share. A call option
with an exercise price of $79 sells for $3.70 and expires in three
months.
If the risk-free rate of interest is 3.4 percent per year,
compounded continuously, what is the price of a put option with the
same exercise price? (Do not round intermediate
calculations and round your final answer to 2 decimal places.
(e.g., 32.16))
Put price
$

T-bills currently yield 4.1 percent. Stock in Danotos
Manufacturing is currently selling for $78 per share. There is no
possibility that the stock will be worth less than $71 per share in
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exercise price? (Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
a-2. What is the intrinsic value? (Do not round intermediate
calculations and round your answer to the...

A stock is currently priced at $57. The stock will either
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until expiration.
If the risk-free rate is 2 percent, what is the risk-neutral
value of the call option? (Do not round intermediate
calculations and round your final answer to 2 decimal places.
(e.g., 32.16))
Call value
$

A call option with an exercise price of $40 and three months to
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exercise price? (Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
Put option price= __________

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outstanding.
What are earnings per share (EPS)? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
Earnings per share [] $
What is the price?earnings ratio? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)...

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outstanding.
What are
earnings per share (EPS)?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g.,
32.16.)
Earnings
per share
$
What is
the price?earnings ratio?
(Do not round intermediate calculations and round your
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32.16.)
Price?earnings...

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