Question: a. In Section 21-3 we calculated the risk (beta) of a six-month call option on Google stock with an exercise price of $430. Now repeat

a. In Section 21-3 we calculated the risk (beta) of a six-month call option on Google stock with an exercise price of $430. Now repeat the exercise for a similar option with an exercise price of $400. Does the risk rise or fall as the exercise price is reduced?

b. Now calculate the risk of a one-year call on Google stock with an exercise price of $430. Does the risk rise or fall as the maturity of the option lengthens?

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a P 430 EX 400 04068 t 05 rf 003 annually Nd 1 06726 Nd 2 05633 Call value Nd 1 P Nd 2 PVEX 06726 ... View full answer

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