Xiaozhi Construction Company purchased 1,000,000 building materials on March 23, 2020, to avoid buying 500 call options

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Xiaozhi Construction Company purchased 1,000,000 building materials on March 23, 2020, to avoid buying 500 call options on the day of its fair value. It can purchase 50,000 units of building materials at the strike price of 20 (the market price on the purchase call date is 20), and the call option expires The day is 2020.12.20, and its market price and time value changes are as follows

2020/3/31 2020/6/30 2020/12/10 Market price FV $19 $22 $24 Time value of call option 400 300 20

1. 2020/3.23 The intrinsic value of the call option is? (1) and the time value is? (2) 2. 2020/3/31 The intrinsic value of th

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Financial Reporting and Analysis

ISBN: 978-1259722653

7th edition

Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer

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Posted Date: May 20, 2022 07:26 AM

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Xiaozhi Construction Company purchased 1,000,000 building materials on March 23, 2020, to avoid buying 500 call options

Question:

2020/3/31 2020/6/30 2020/12/10 Market price FV $19 $22 $24 Time value of call option 400 300 20 2020/3/31 2020/6/30 2020/12/10 Market price FV $19 $22 $24 Time value of call option 400 300 20

Expert Answer:

1 On the purchase date the intrinsic value of ... View the full answer

Financial Reporting and Analysis

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