Calculate the option exercise value

Assignment Help Finance Basics
Reference no: EM13263784

The exercise price on one of ORNE Corporation's call options is $35 and the price of the underlying stock is $34. The option will expire in 55 days. The option is currently selling for $0.25.

a. Calculate the option's exercise value?
b. Calculate the value of the premium over and above the exercise value? What does this value represent?
c. Is this an out-of-the money option, at-the-money, or in-the-money? Why?
d. What will happen to the value of the option if the underlying stock price changes to $34.50? Why?
e. If Orne Corporation had issued a put option (instead of the call), would it have a greater or lesser value than the call option? Why?

 

Reference no: EM13263784

Questions Cloud

Data commentary for bicycle commuters : Data Commentary for Bicycle Commuters Perception of Danger while Using Mobile Phones - The last statistic is fifteen percent of male respondents thought that this is not a problem and does not need attention
What is the future value of your retirement : You deposit $10,000 into a retirement account at the end of the next 10 years earning 9% interest, what is the future value of your retirement after 10 years?
Determine what is the frequency step increment : a ppl frequency synthesizer has an output frequency of 470 MHz. A divideby10 prescaler is used. The reference frequency is 10 KHz. what is the frequency step increment
What is the value of a perpetuity with an annual payment : What is the value of a perpetuity with an annual payment of $50 and a discount rate of 4%?
Calculate the option exercise value : The exercise price on one of ORNE Corporation's call options is $35 and the price of the underlying stock is $34. The option will expire in 55 days. The option is currently selling for $0.25.
Calculate the output voltage and the output waveform : With vs = 3sin200tV, R1=20kohms, Cf=5uF, vc(0) = 1.5V. 2. Calculate the output voltage and the output waveform of the circuit.
What is the scattering angle of the photon : In a Compton scattering experiment, the scattered electron is observed to move in the same direction, what is the scattering angle of the photon
What is the companys cost of equity capital : Marie's CFO has calculated the company's WACC as 7.83%. What is the company's cost of equity capital? Round your answer to two decimal places.
Find the initial momentum of the photon : An X-ray photon with a wavelength of 0.260nm scatters from a free electron at rest. Find the initial momentum of the photon

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Evaluate the equipment purchase

If the firm's tax rate is 30% what discount rate should you use to evaluate the equipment purchase?

  How much did he actually pay for this bond

How much did he actually pay for this bond? Assume that the accrual interest calculation uses the actual number of day.

  Problems and factors of domestic financial management

What new problems and factors are encountered in international as opposed to domestic financial management?

  Solving ratio related problems

Compute a few ratios and compare Reed's results with industry averages. Determine what do these ratios indicate?

  What is the dollar amount of income

If London needs to have a total return of 0.23 during the year, then what is the dollar amount of income that she needed to have to reach her objective?

  Calculation of npv of two projects with different lives

Calculation of NPV of two projects with different lives and cash flows and considering a project that has the following cash flow and WACC data

  Computation of net present value of the project

Computation of net present value of the project and Determine the net present value of the projects based on a zero discount rate

  Solving international debt problem

Determine how might debt equity swaps help to solve the international debt problem? Point out the advantages and disadvantages from the viewpoint of the debtor country.

  Compare long-term instruments and short-term risks

Compare long-term instruments and short-term risks, in terms of the various types of risk to which investors are exposed. Explain your answers.

  What percentage of the firms capital funding should be debt

The pretax cost of debt is 6.7 percent and the cost of common stock is 10.4 percent. What percentage of the firm's capital funding should be debt financing if its tax rate is 30 percent?

  Objective type questions on financial strategies

Objective type questions on Financial strategies and is it true or false that Corporate shareholders are exposed to unlimited liability

  Calculate amount of the gain

An accountant, whose entire practice consists of real estate agents and real estate developers, bought, on the advice of a client, a parcel of raw land 2-years ago for $50,000.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd