Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $80. Option Expiration Strike Price Calls Puts Volume Last Volume Last RWJ March 72 250 5.20 180 5.30 April 72 190 11.05 147 10.05 July 72 159 11.90 63 13.85 October 72 80 12.80 31 12.45 a-1. Are the call options in or out of the money? multiple choice 1 In the money Out of the money a-2. What is the intrinsic value of an RWJ Corporation call option? b-1. Are the put options in or out of the money? multiple choice 2 In the money Out of the money b-2. What is the intrinsic value of an RWJ Corporation put option? c-1. Two of the options are clearly mispriced. Which ones? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) check all that apply March call April call October call March put October put April put c-2. What is the arbitrage profit you could make on each of the mispriced options? (Round your answers to 2 decimal places, e.g., 32.16.) Mispriced option Profit
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $80. Option Expiration Strike Price Calls Puts Volume Last Volume Last RWJ March 72 250 5.20 180 5.30 April 72 190 11.05 147 10.05 July 72 159 11.90 63 13.85 October 72 80 12.80 31 12.45 a-1. Are the call options in or out of the money? multiple choice 1 In the money Out of the money a-2. What is the intrinsic value of an RWJ Corporation call option? b-1. Are the put options in or out of the money? multiple choice 2 In the money Out of the money b-2. What is the intrinsic value of an RWJ Corporation put option? c-1. Two of the options are clearly mispriced. Which ones? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) check all that apply March call April call October call March put October put April put c-2. What is the arbitrage profit you could make on each of the mispriced options? (Round your answers to 2 decimal places, e.g., 32.16.) Mispriced option Profit
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
Related questions
Question
|
Use the option quote information shown here to answer the questions that follow. The stock is currently selling for $80. |
| Option | Expiration | Strike Price | Calls | Puts | ||
|---|---|---|---|---|---|---|
| Volume | Last | Volume | Last | |||
| RWJ | March | 72 | 250 | 5.20 | 180 | 5.30 |
| April | 72 | 190 | 11.05 | 147 | 10.05 | |
| July | 72 | 159 | 11.90 | 63 | 13.85 | |
| October | 72 | 80 | 12.80 | 31 | 12.45 |
| a-1. | Are the call options in or out of the money? |
multiple choice 1
|
| a-2. | What is the intrinsic value of an RWJ Corporation call option? |
| b-1. | Are the put options in or out of the money? |
multiple choice 2
|
| b-2. | What is the intrinsic value of an RWJ Corporation put option? |
| c-1. | Two of the options are clearly mispriced. Which ones? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) |
check all that apply
|
| c-2. |
What is the arbitrage profit you could make on each of the mispriced options? (Round your answers to 2 decimal places, e.g., 32.16.) |
|
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