Question

The price of Tara, Inc., stock will be either $65 or $85 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 3.9 percent.
a. Suppose the current price of Tara stock is $75. What is the value of the call option if the exercise price is $45 per share?
b. Suppose the exercise price is $70 in part (a). What is the value of the call option now?


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  • CreatedOctober 01, 2015
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