The price of Chive Corp. stock will be either $57 or $84 at the end of...
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The price of Chive Corp. stock will be either $57 or $84 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent. a. Suppose the current price of the company's stock is $65. What is the value of the call option if the exercise price is $50 per share? b. Suppose the exercise price is $60 in part (a). What is the value of the call option now? Input Area: Low stock price $57 High stock price $84 T-bills 4% Current price $65 Exercise price $50 $60 1 Exercise price 2 B (Use cells A6 to B11 from the given information to complete this question.) 4 5 Output Area: 6 7 Call price 8 Call price 9 + The price of Chive Corp. stock will be either $57 or $84 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent. a. Suppose the current price of the company's stock is $65. What is the value of the call option if the exercise price is $50 per share? b. Suppose the exercise price is $60 in part (a). What is the value of the call option now? Input Area: Low stock price $57 High stock price $84 T-bills 4% Current price $65 Exercise price $50 $60 1 Exercise price 2 B (Use cells A6 to B11 from the given information to complete this question.) 4 5 Output Area: 6 7 Call price 8 Call price 9 +
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