Calculating Option Values T-bills currently yield 6.2 percent. Stock in Pinta Manufacturing is currently selling for $55

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Calculating Option Values T-bills currently yield 6.2 percent. Stock in Pinta Manufacturing is currently selling for $55 per share. There is no possibility that the stock will be worth less than $50 per share in one year.

a. What is the value of a call option with a $45 exercise price? What is the intrinsic value?

b. What is the value of a call option with a $35 exercise price? What is the intrinsic value?

c. What is the value of a put option with a $45 exercise price? What is the intrinsic value?

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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th Edition

Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan

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Question Posted: May 03, 2011 03:29 AM

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Calculating Option Values T-bills currently yield 6.2 percent. Stock in Pinta Manufacturing is currently selling for $55

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a The value of the call is the stock price minus the present ...View the full answer

Fundamentals of Corporate Finance

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