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Question: The price of Build A Fire Corp. stock will be either $94 or $123 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 2 percent.

a. Suppose the current price of the company's stock is $105.

What is the value of the call option if the exercise price is $90 per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Value of the call option $

b. Suppose the exercise price is $120 and the current price of the company's stock is $105.

What is the value of the call option now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M93038672

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