The common stock of Teledyne trades on the NYSE. Teledyne has never paid a cash dividend. The

Question:

The common stock of Teledyne trades on the NYSE. Teledyne has never paid a cash dividend. The stock is relatively risky. Assume that the beta for Teledyne is 1.3 and that Teledyne closed at a price of $162. Hypothetical option quotes on Teledyne are as follows:

Based on the Teledyne data, answer the following questions:

a. Which calls are in the money?

b. Which puts are in the money?

c. Why are investors willing to pay 1 1/4 for the 180 call but only 1 for the 150 put, which is closer to the current market price?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...