NORREL Corporation's stock is selling for $35 per share. An investor is considering buying a call option with an exercise price of $40. The investor is willing to pay the premium of 50 cents per option
. find out the exercise value of the option
. Why is an investor willing to pay 50 cents an option when the stock is going for $35?
find out the exercise value if the price of the stock increases to $42 per share.
. If the exercise price for both the call option and the put option is $40, which will have a higher premium if the underlying stock price falls to $30 per share? Why?