Question
The price of Tara, Inc., stock will be either $66 or $88 at the end of...
|
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 | $ |
| b. |
Suppose the current price of the company's stock is $77. What is the value of the call option if the exercise price is $72 per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Call value | $ |
*Call value for B is $10.28 but I don't have the value for A
Homework Answers
Answer #1
NO INTERMEDIATE ROUNDING IS DONE
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