Question: T bills currently yield 4 3 percent Stock in Octagon Manufacturing is

T-bills currently yield 4.3 percent. Stock in Octagon 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?

View Solution:


Sale on SolutionInn
Sales0
Views71
Comments
  • CreatedOctober 01, 2015
  • Files Included
Post your question
5000