How much of the option premium

Assignment Help Finance Basics
Reference no: EM13282656

You have taken a long position in a call option on IBM common stock. The option has an exercise price of $136 and IBM's stock currently trades at $140. The option premium is $5 per contract.

a.) What is your net profit on the option if IBM's stock price increases to $150 at expiration of the option and you exercise the option?

b.) How much of the option premium is due to intrinsic value versus time value?

 

Reference no: EM13282656

Questions Cloud

At what frequehcy would you expect resonant behavior : A mass of 0.5 kg is suspended from a spring, which stretches by 8 cm. At what frequehcy would you expect resonant behavior
Determine the length of the wire from which the coil is made : A generator uses a coil that has 110 turns and a 0.475 T magnetic field. The frequency of this generator is 43.0 Hz, and its emf has an rms value of 230 V. Assuming that each turn of the coil is a square (an approximation)
Explain chlorosulfonic acid with another reagent : Sodium lauryl sulfate can be prepared by replacing chlorosulfonic acid with another reagent. What could be used? Show the equations.
Find the damping parameter due to the viscous medium : A panicular spring has a spring constant of 86 N/m and a mass of 0.548 kg at its end. When the spring is driven in a viscous medium, find the damping parameter due to the viscous medium
How much of the option premium : You have taken a long position in a call option on IBM common stock. The option has an exercise price of $136 and IBM's stock currently trades at $140. The option premium is $5 per contract.
Determine how much power is the house using : In addition, assume that your house is the only one using electric power. At a substation the primary of a step-down transformer (turns ratio = 1:26) receives the voltage from the high-voltage transmission line.
Calculate the power dissipated by the damping force : Consider the driven, damped harmonic oscillaror discussed in Section 13-8. Calculate the power dissipated by the damping force
Explain the emission of sulfur oxides by coal-fired : Acid rain was at one time an important point of contention between the United States and Canada. Much of this acid was the result of the emission of sulfur oxides by coal-fired electricity-generating plants in southern Indiana and Ohio
Compute the initial charge on each sphere : There are two identical, positively charged conducting spheres fixed in space. The spheres are 45.4 cm apart, find the initial charge on each sphere

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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