A PUT and a CALL option are written on a stock with a strike price of $60. The options are held until expiration. 1. Calculate the intrinsic value of the PUT option if the stock is currently selling for $75. a) $0 b) $15 c) -$15 d) $57 e) 63 f) None of the above
A PUT and a CALL option are written on a stock with a strike price of $60. The options are held until expiration. 1. Calculate the intrinsic value of the PUT option if the stock is currently selling for $75. a) $0 b) $15 c) -$15 d) $57 e) 63 f) None of the above
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter5: Financial Options
Section: Chapter Questions
Problem 4P: Put–Call Parity
The current price of a stock is $33, and the annual risk-free rate is 6%. A call...
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A PUT and a CALL option are written on a stock with a strike
price of $60. The options are held until expiration.
1. Calculate the intrinsic value of the PUT option if the stock is currently selling for $75.
a) $0
b) $15
c) -$15
d) $57
e) 63
f) None of the above
2. Calculate the breakeven stock price for the PUT option if the premium is $3. What is the time value of the put?
a) $63; $3
b) $57; $3
c) $55; $0
d) $76; $0
e) $55; $0
f) None of the above
3. Suppose the stock price at expiration is $75. Put premium is $3. The PUT option
WRITER’S profit would be:
a) -$3
b) $3
c) -$15
d) $15
e) None of the above
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