The price of ervin corp stock will be either 86 or 119 at, Ask an Expert

Finance

The price of Ervin Corp. stock will be either $86 or $119 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 5 percent.

a. Suppose the current price of the stock is $97. What is the value of the call option if the exercise price is $85 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 $115 and the stock price is $97. 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.:- M92850113

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