You are given the following information concerning options on a particular stock:Stock price=Exercise price=Risk-free rate=Maturity=Standard deviation=$83Intrinsic value=$$806% per year, compounded continuously6 months47% per year(a)What is the intrinsic value of the call option? (Please keep two digits after the decimal point.)(b)What is the time premium of the call option? (Please keep two digits after the decimal point.)Time premium of the call option=$

a) Intrinsic value of the call option= Current price - exercise price= $83-$80Intrinsic value of the…

You are given the following information concerning options on a particular stock: Stock price= Exercise price= Risk-free rate= Maturity= Standard deviation= Intrinsic value=$ $83 $80 Time premium of the call option=$ 6% per year, compounded continuously 6 months (a)What is the intrinsic value of the call option? (Please keep two digits after the decimal point.) 47% per year (b)What is the time premium of the call option? (Please keep two digits after the decimal point.)

You are given the following information concerning options on a particular stock: Stock price= Exercise price= Risk-free rate= Maturity= Standard deviation= Intrinsic value=$ $83 $80 Time premium of the call option=$ 6% per year, compounded continuously 6 months (a)What is the intrinsic value of the call option? (Please keep two digits after the decimal point.) 47% per year (b)What is the time premium of the call option? (Please keep two digits after the decimal point.)

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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he stock price of Copious Corp. is currently $31. The stock price 2 year(s) from now will be either $34 or $ 27. The annual risk - free rate is 7.2%. Using the binomial model, what is the value of a call option with an exercise price of $31 and an expiration date 2 year(s) from now?
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A put option that expires in six months with an exercise price of $65 sells for $4.45. The stock is currently priced at $61, and the risk-free rate is 3.9 percent per year, compounded continuously. What is the price of a call option with the same exercise price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) X Answer is complete but not entirely correct. Call price $ 1.68 X

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