When computing, please do not round off. Only final answers must be rounded off to two decimal places 1. The Finance Department of ABC Corporation will have P1,500,000 in excess cash by the end of the month. It will be investing the excess cash in shares by the end of the month. The department wants to already reserve X Corp. shares as the investment. A standardized option has a contract size of 1,000 X Corp. shares and a strike price of P480 per share. Assuming that the Finance Department has acquired options that is within their budget and that the current market value of an X Corp. share is P500. The option contracts would have a total value of how much as of the exercise date?

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
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Topic: Option Pricing

When computing, please do not round off. Only final answers must be rounded off to two decimal places

1. The Finance Department of ABC Corporation will have P1,500,000 in excess cash by the end of the month. It will be investing the excess cash in shares by the end of the month. The department wants to already reserve X Corp. shares as the investment. A standardized option has a contract size of 1,000 X Corp. shares and a strike price of P480 per share. Assuming that the Finance Department has acquired options that is within their budget and that the current market value of an X Corp. share is P500. The option contracts would have a total value of how much as of the exercise date? 

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