The price of a stock is 56 you can buy a six-month call at, Ask an Expert

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The price of a stock is $56. You can buy a six-month call at $55 for $4 or a six-month put at $55 for $2.

a. What is the intrinsic value of the call? Round your answer to the nearest dollar. $

b. What is the intrinsic value of the put? Round your answer to the nearest dollar. $

c. What is the time premium paid for the call? Round your answer to the nearest dollar. $

d. What is the time premium paid for the put? Round your answer to the nearest dollar. $

f. What is the maximum you could lose by selling the call covered? Round your answer to the nearest dollar. $

g. What is the maximum possible profit if you sell the stock short? Round your answer to the nearest dollar. $

After six months, the price of the stock is $63.

h. What is the value of the call? Round your answer to the nearest dollar. $

i. What is the profit or loss from buying the put? Round your answer to the nearest dollar. $

j. If you had sold the stock short six months earlier, what would your profit or loss be? Round your answer to the nearest dollar. $

k. If you had sold the call covered, what would your profit or loss be? Round your answer to the nearest dollar. $a

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91931601

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