Assume a stock is selling for $48.50 with options available at 40, 50, and 60 strike prices.

Question:

Assume a stock is selling for $48.50 with options available at 40, 50, and 60 strike prices. The 50 call option price is at 2.75.
a. What is the intrinsic value of the 50 call?
b. Is the 50 call in the money?
c. What is the speculative premium on the 50 call option?
d. What percentage of price does the speculative premium represent?
e. Are the 40 and 60 call options in the money?
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...