Question: a. Explain the five variables that affect the value of an option, and how do changes in each of these variables affect the value of

a. Explain the five variables that affect the value of an option, and how do changes in each of these variables affect the value of a call option? (5 marks)

b. Business valuation Price to earnings ratio: Using the information given in the table below, determine the price-earnings ratio for DEF Company? (10 marks)

Earnings	$190,000
Number of shares outstanding	70,000
Price per share	$25
Book value per share	$15

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