The current stock price of Heart, Inc. is $20. Call and put options with exercise prices of $50 and 15 days to maturity are currently trading. Which of these scenarios is most likely to occur if the stock price falls by $1? Call value decreases by $0.76, Put value increases by $0.96 Call value decreases by $0.94, Put value increases by $0.08 Call value decreases by $0.07, Put value increases by $0.89

The current stock price of Heart, Inc. is $20. Call and put options with exercise prices of $50 and 15 days to maturity are currently trading. Which of these scenarios is most likely to occur if the stock price falls by $1? Call value decreases by $0.76, Put value increases by $0.96 Call value decreases by $0.94, Put value increases by $0.08 Call value decreases by $0.07, Put value increases by $0.89

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

See similar textbooks

Similar questions

can someone help me with this please and no excel
A stock is currently priced at $42 and will move up by a factor of 1.24 or down by a factor of .93 each period over each of the next two periods. The risk-free rate of interest is 3 percent. What is the value of a put option with a strike price of $51? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Perform all calculations with excel: ABC Corporation is currently trading at $40, with volatility\ sigma 30%, r = 5%, and no dividends. Assume that the ABC stock price can be modeled according to a three period binomial approach with T = 9 months and n = 3, so that the stock price moves every 3 months. 1. Build out the binomial tree for ABC. 2. What is the value of an American put option with strike price 40? 3. What is the value of a European call option with strike price 50?
A stock is currently priced at $63 and has an annual standard deviation of 43 percent. The dividend yield of the stock is 5.2 percent, and the risk - free rate is 5.2 percent. What is the value of a call option on the stock with a strike price of $60 and 48 days to expiration? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Call option $
A stock is currently priced at $61 and has an annual standard deviation of 41 percent. The dividend yield of the stock is 2.8 percent, and the risk-free rate is 4.8 percent. What is the value of a call option on the stock with a strike price of $58 and 52 days to expiration? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Call option $
A stock is currently trading for $25 per share and an investor is interested in the following two options with a one year expiration term. Options Call Put Strike Price $28 $24 Quoted Price $2 $4 a) Calculate the intrinsic values of the call and put. b) Draw the profit diagram for a short position in the put option described above. Label the diagram well. Show all the critical points on the diagram. For example, the intercepts on axes, maximum profit or maximum loss. What price movements are required for the investor to have a positive profit? c) Draw the profit diagram for a long position in the call option. And label the diagram well. d) Suppose one month later, the stock price moves up to $30 per share, how will the prices of the call and put change? Why? Briefly explain. e) Suppose an investor purchased 10 contracts of the 28 calls and sold 10 contracts of the 24 puts. If the stock price turns out to be $30 per share in one month, what is the total profit for this investor?
A stock is currently priced at $52 and will move up by a factor of 1.14 or down by a factor of .90 each period over each of the next two periods. The risk-free rate of interest is 3 percent. What is the value of a put option with a strike price of $58? (Do not round intermediate calculations. Round your answer to 2 decimal places.) X Answer is complete but not entirely correct. Value of a put option $ 4.57
Jitu Don't upload any image please
A stock is currently selling for $39. In one period, the stock will move up by a factor of 1.29 or down by a factor of .53. A call option with a strike price of $50 is available. If the risk-free rate of interest is 2.5 percent for this period, what is the value of the call option?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS