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problem1. A call option on Mass Computer Corp. is trading with the strike price of $100 and an expiration date of November 18th at 4 pm in afternoon. The premium paid on call is $7.55. What is the net profit (where net profit consists of the premium in the computation) from purchasing the call just prior to 4 pm on November 18 when at this time the stock price per share of Mass Computer is?

problem2. IBM Corporation is selling at $100.15 per share, and call options start on trading with many different strike prices and expiration dates. What is minimum value that the premium of any of these calls options can take?

problem3. Mass Glass Corporation is a firm with $50 million in an equity and $10 million in debt. The debt has maturity of 12 years. If we view the equity of this firm as a call option, then we can measure this option as one whose exercise price is $ million, whose time to expiration is years, and whose underlying asset has the value of $ million?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93716

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