Intrinsic value

Assignment Help Finance Basics
Reference no: EM1339556

Valuation - options

The following information refers to a six-month call option on the stock of XYZ, Inc.

•Price of the underlying stock: $50.

•Strike price of the three-month call: $45.

•Market price of the option: $10.

a) What is the intrinsic value of the option?

b) What is the option's time premium at this price?

Reference no: EM1339556

Questions Cloud

Patriot and british strengths and weaknesses : Assess both Patriot and British strengths and weaknesses when the Revolution began.
Valuation zero-coupon bond : A U.S. Government bond with a face amount of $10,000 with 13 years to maturity is yielding 5.5%. Determine the current selling price?
Explaining skills to be a successful project manager : Write an essay that explains and discusses the skills to be a successful project manager.
Is it extremely small to demonstrate brownian movement : What is the difference between molecular motion and diffusion?is it extremely small to demonstrate brownian movement.
Intrinsic value : Determine intrinsic value of the option and option's time premium at this price.
Types of risks are inherent in a project : What types of risks are inherent in a project? Where do they originate? Can they be mitigated? How? What are the consequences of ignoring a conflict within a project team?
Problems under articles of confederation : What problems did the new nation experience under the Articles of Confederation? Why did these problems develop?
Why is the biologically important : What characteristics of beets make them useful as experimental models for studying cellular membranes?Why is the biologically important.
Explaining projects assist organizations : How do projects assist organizations and people to accomplish things?

Reviews

Write a Review

Finance Basics Questions & Answers

  Inventory conversion period of 50 days

Inventory conversion period of 50 days

  Explain trend of interest rates

Explain trend of interest rates and describe the trend of interest rates over the last several years

  Inventory and cost of goods sold and journal entries

Inventory and cost of goods sold and journal entries - Prepare the sales portion of the entry for this sale on Randy's books. and Prepare the cost of sales portion of the entry for this sale on Randy's books.

  Computation of bonds current yield and yield to maturity

Computation of bonds Current yield and yield to maturity and How much should you be willing to pay for Bond X today

  Offer value per share and offer premium

Garth's Micro Brewery, whose shares are currently trading at $40 per share, is considering acquiring Wayne's Beer Bottling Co. What is the offer value per share and offer premium?

  Difficulties in organizing a casebook

What are some of the difficulties which can be present when organizing the casebook?

  Calculation of fair rate of return by using capm

Compute a fair rate of return for Intel common stock, which has 1.2 beta. The risk-free rate is 6 percent, and the market portfolio (New York Stock Exchange stocks) has expected return of 16 percent.

  Various techniques of inventory management

An investor is thinking of investing in a recurring deposit scheme that offers an interest rate of 12% per annum

  Finding the transfer price in different situations

Finding the transfer price in different situations - If Austria introduces an import tariff of 25 percent on microwave ovens, and permits this to be a deductible expense in figuring the subsidiary's income tax, what should the transfer price be?

  Explain way of increasing allowance for doubtful accounts

Explain way of increasing allowance for doubtful accounts without the adjustment increasing expenses and Is there any way we can increase the allowance without the adjustment increasing expenses

  Superannuation-defined benefit

Write down difference between inflation and the 'time value of money'? Please describe what issues relating to concept of 'time value of money' might be significant when choosing between a defined benefit or an accumulation super fund.

  Computing investor-s average degree of risk aversion

The standard deviation of the market portfolio is 22%. What is the representative investor’s average degree of risk aversion?

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