1 how does the price of an option and the exercise price, Ask an Expert

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1. How does the price of an option and the exercise price affect the payoff from an option.

2. Suppose that the price of the underlying is $40 and that the option price is $5.

a. If the exercise price for a put option is $42, what are the intrinsic value and the time premium for this option?

b. If the exercise price for a call option is $50, what are the intrinsic value and the time premium for this option?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92067708

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