Problemthe exercise price on a call option is 30 and the, Ask an Expert

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Problem:

The exercise price on a call option is $30 and the price of the underlying stock is $35. The option will expire in 35 days. The option is currently selling for $5.75.

Answer the following question:

Question 1: Calculate the option's exercise value?

Question 2: Calculate the value of the premium over and above the exercise value?

Question 3: Is this an out-of-the money, at-the-money, or in-the-money option?

Question 4: What will happen to the time and exercise value of the option if the underlying stock price changes to $30?

Question 5: Is this an example of a covered call option or a naked call option?

Explain in detail and please show your all work.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146191

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