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Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A-9: Call option On March 1, 2022, Jensen Corp. purchased a call option on shares of YTV stock. The contract was for 100 shares at a strike price of $90 per share, with an expiration date of May 31, 2022. The option contract premium was $50. On March 31, a market appraisal estimated the time value of the option to be $40. Jensen settled the option contract on May 10. Prices of YTV stock during the option period are provided below. March 1 May 10 $85 Price of YTV stock: $90 March 31 $80 At what amount would Jensen report as the value of the call option in its March 31, 2022 balance sheet?
Transcribed Image Text:A-9: Call option On March 1, 2022, Jensen Corp. purchased a call option on shares of YTV stock. The contract was for 100 shares at a strike price of $90 per share, with an expiration date of May 31, 2022. The option contract premium was $50. On March 31, a market appraisal estimated the time value of the option to be $40. Jensen settled the option contract on May 10. Prices of YTV stock during the option period are provided below. March 1 May 10 $85 Price of YTV stock: $90 March 31 $80 At what amount would Jensen report as the value of the call option in its March 31, 2022 balance sheet?
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