he CEO of SubShack was granted 100,000 options. The stock price at the time of the granting of the options was $35 and the options have an exercise price of $40. The risk free rate was 3% and the options expire in 5 years. The variance on the stock is .06, or 6.0% What is the value of the options contract (use Black Scholes formula and show all formulas and steps for d1, d2, N(d1), N(d2) and the continuous discount rate)? If he had negotiated a larger salary and only 10,000 options, what would be the value of the options contract?
he CEO of SubShack was granted 100,000 options. The stock price at the time of the granting of the options was $35 and the options have an exercise price of $40. The risk free rate was 3% and the options expire in 5 years. The variance on the stock is .06, or 6.0% What is the value of the options contract (use Black Scholes formula and show all formulas and steps for d1, d2, N(d1), N(d2) and the continuous discount rate)? If he had negotiated a larger salary and only 10,000 options, what would be the value of the options contract?
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
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- The CEO of SubShack was granted 100,000 options. The stock price at the time of the granting of the options was $35 and the options have an exercise price of $40. The risk free rate was 3% and the options expire in 5 years. The variance on the stock is .06, or 6.0%
- What is the value of the options contract (use Black Scholes formula and show all formulas and steps for d1, d2, N(d1), N(d2) and the continuous discount rate)?
- If he had negotiated a larger salary and only 10,000 options, what would be the value of the options contract?
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