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

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 3MC: Consider Triple Play’s call option with a $25 strike price. The following table contains historical...

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 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.)

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