Question 2 The CFO of Harbour Cruises Ltd has been granted 1,000,000 options. The stock price...

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Question 2 The CFO of Harbour Cruises Ltd has been granted 1,000,000 options. The stock price at the time of the granting of the options was $20 and the options were granted at-the-money. The risk free rate is 4% pa and the options expire in 5 years. The variance of returns on the stock is .0500. Required: a. b. What is the value of her options contract? If the options cannot be exercised or traded before 3 years would this make them more or less valuable to the CFO? (No calculation required). (11 marks) Question 2 The CFO of Harbour Cruises Ltd has been granted 1,000,000 options. The stock price at the time of the granting of the options was $20 and the options were granted at-the-money. The risk free rate is 4% pa and the options expire in 5 years. The variance of returns on the stock is .0500. Required: a. b. What is the value of her options contract? If the options cannot be exercised or traded before 3 years would this make them more or less valuable to the CFO? (No calculation required). (11 marks)