The price of build a fire corp stock will be either 54 or, Ask an Expert

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The price of Build A Fire Corp. stock will be either $54 or $87 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 $63. What is the value of the call option if the exercise price is $50 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 $80 and the current price of the company's stock is $63. 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.)

Value of the call option $

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92752203

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