COMMERCE 3FA3 Chapter Notes - Chapter 25: Call Option, Glaxosmithkline, Zero-Coupon Bond
20 Jun 2018
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CHAPTER 25- OPTIONS AND DERIVATIVES - ONE CALL OPTION , PUT OPTION , option price , instrinic value, strike, option on ur investment? current conversion value , straight bond value ..conversion price
fave value percent. Coupon market value of firms debt value of equity pure discount debt floor value warrants d1
The common stock of Winsson, Inc. $.48The common stock of New Horizon Homes 4.20 The common stock of Mercury Motors is selling for $43.90 a share.8.01The common stock of Delta Securities 10.32Last week, you purchased a call option on Denver, Inc.t $29.03? $1.53 Last week, you purchased a call option on Rosewood$38.75? 0Three weeks ago, you purchased a November
25 put option on Kepner stocK put contract? $20Three weeks ago, you purchased a July 45 put option on RPJ stock put contract? 25You own four call option contracts on Webster South stock $16.40 a share? $0You own six call option contracts on Neilson Markets stock ..$29.70 a share? $0You own one call option with an exercise price of $30 on Nadia Interiors stock. ..expires in one
year? $.76 You currently own a one-year call option on Caspian Way stock. call option? 2.59You currently own a one-year call option on Mayer Industries stock. 6.08You purchased one ABP 35 call option contract at a quoted price of $1.65.$34.20 on the option expiration date? -165You own two put option contracts on Magpie stock $35.90 a share? 320You own a call option on Pester
Me will finish in the money.call option? 4.77You own a call option on Beaker Glass stock that expires in one year.? 4.77You own a put option contract on Oliver Brothers$32.90 a share? 460You sold one call option contract with a strike price of $42.50 investment? 110You purchased eight LJK call option contracts with a strike price of $42.50? 8.00Six months ago, you purchased a put
option on ACC..s investment? -70You purchased six TJH call option contracts..investment? 360You sold (wrote) five TWX call option contracts with a strike price of $40 +VE1600 you sold (wrote) three TXA call option contracts with a strike price of $35 7803 months ago, you purchased a put option on WXX stock ..WXX stock is $62.50-60You own five put option contracts on XYZ
stock 24.50 a share? 250Today, you are buying a one-year call on one share of Hi-Lo $.62Today, you are buying a one-year call on SLO stock with a strike price of $50 can lose over the next year? —1.28Today, you are buying a one-year call on JKL stock.. $44 one year from now? 3.86Today, you are buying a one-year call on one share of XYZ stock.. $37 one year from now? 2.07The
common stock of Trynor's, Inc. is currently priced at $37.90 a share…s $40? $0.71 A $1,000 bond has a conversion value of $80 a share. ..conversion value of the bond? $811.25 A convertible bond has a face value of $1,000 and a conversion price of $22.50.The current price of the stock is $23.24. What is the straight bond value? 863.22A convertible bond has a face value of $1,000 and
a conversion price of $20 The current price of the stock is $19.74. What is the straight bond value? 970.32A convertible bond has a face value of $1,000 and a conversion price of $22.50. The current price of the stock is $21.24. What is the conversion value of this bond? 944.00A $1,000 face value 7% convertible bond pays interest semi-annually and has a maturity date of five years. min
convertible bond should sell? $962.50Kurt owns a convertible bond that matures in three years. ..straight bond value? 974.69 Kurt owns a convertible bond that matures in three years. conversion value of this bond? $1,049.79 Neal owns a convertible bond that matures in four years.. conversion value of this bond? $1,014.88 A convertible bond has a face value of $1,000 and a conversion
price of $35. $36.30. What is the conversion value of this bond? $1,037.14 You own one convertible bond with a face value of $1,000 f Alpha stock. This bond is currently selling for $1,063. What is the conversion price? 112.50You own six convertible bonds. These bonds have a 5 percent coupon, a $1,000 face valu.. 300 shares You own five convertible bonds. These bonds have a 6
percent coupon $22.50. How many shares of stock will you receive if you convert all of your bonds 222.22 shares bonds of VDM, Inc. are convertible into shares of the firm's common stock at $50 per share. The current price of the common stock is $45 per share. The bonds have a $1,000 par value and currently sell for $950 apiece. What is the conversion price of these bonds? 50
conversion ratio of these bonds? 20 conversion value of these bonds? 900conversion premium at issuance? 25%$1,000 convertible bond has a discount rate of 6%. What is the conversion price?18.90Chart What is the intrinsic value of the March 30 call option? 3.65buy four March 30 call option contracts on KX stock given the following price quotes? KX (KX) Underlying stock price:
33.65 1480wrote one March 35 put contract? KX (KX) Underlying stock price: 33.65 140 Underlying stock price: 45.80 Suppose you bought 10 Glaxo Oct 45 call contracts. Just before the option expires, the stock is selling for $50. 2,200.00The assets of Bill's Boats 1624You sold twenty put contracts on Twin City.-8400You sold a put contract on EDF stock at an option price of $.40.
positions in this stock today?-60You sold five put option contracts on QLN stock with an exercise price of $45 and an option price of $2.20. Today, the option expires and the underlying stock is selling for $38.65 a share. investment? -$2,075 You sold five put options on Wexmeyer stock with an exercise price of $55 and an option price of $1.70.. 850You sold ten put option contracts on
PLT stock with an exercise price of $32.50 1100Given that d
1
= 1.50 in the Black-Scholes formula, ..$31.23? 1.42 If d
1
= -1.52 in the Black-Scholes formula, what is the value for N(d
1
)? 0.0643 6-month call with a strike price of $35 given the Black-Scholes Option Pricing Model 1.85. // 9 MONTH $50 = 2.59 //3 month 45 = 3.23 //9 m 20 = 4.31 ……-.2307 …..125161…...4323 …..
4864 A stock currently has a market value of $12.50. twelve-month call option with a strike price of $10?2.79Underlying stock price: 25 What is the intrinsic value per share of the March put? 0.00What is the time value per share of the March put? 4.00What is the intrinsic value per share of the January call? 5.00What is the time value per share of the January call? 1.00What is the market
value per share of the March call? 5.00You want to purchase one February call option $20 exercise price will cost you 700 Underlying stock price: 45.80 Suppose you bought 10 Glaxo Nov 50 put contracts. Just before the option expires, the stock is selling for $55. What is your net profit (or loss)? Ignore transaction costs. -$9,000.00 buy 100 shares of Glaxo stock for $47.50 on or before
the 3
rd
Friday in February? 500Underlying 45.80 …. What is the market value per share of the November 47.50 call? 2.30Underlying 45.80….What is the market value per share of the November 45 put? 2.304580…What is the intrinsic value per share of the November 45 call? 0.80What is the time value per share of the February 47.50 put? $ 5.30U4580…What is the time value per
share of the November 45 call? 3.50Underlying 45.80..You want to purchase one October 45 call contract on Glaxo stock. The option contract will cost 280U4580.. have the right to sell 100 shares of Glaxo stock on or before the 3
rd
Friday in October for $45 per share?…Oct45put Underlying stock price: 45.80 What is the intrinsic value per share of the November 45 put? 0.00Today,
you purchased one share of MULA.. next year? -1.50You own one call option with an exercise price of $40 on Northwest Exporters stock. This stock is currently selling for $37.90 expires in one year? .82You own one call option with an exercise price of $55 on Doo Little stock.? 2.43Assume the following American call option will finish in-the-money: the exercise price is s 6%. What is
the value of the call option? 1.75The market price of Jasper, Inc. is quite volatile and uncertainty ..$34.50 on the day the options expire? 530he market price of ABC stock has been very volatile and you think this volatility will continue for a few weeks. $24.60 on the day the options expire? -140BC stock is currently priced at $31.42 a share. purchased? 32.00The current market value of
the assets of Samuelson, Inc. is $91 million. firm's debt? 43.37 million The current market value of the assets of Thompson Pumps is $37.29 million. 30.42 millionThe current market value of the assets of ABC, Inc. is $86 million. 42.72 million The current market value of the assets of Ditto Inc. is $63.26 million. debt? 21.08 million Several rumors concerning Wyslow, Inc. stock have
started circulating. These rumors are causing the market price of the stock to be quite volatile. stock price is $4 on the day the options expire? 870Several rumors concerning Nu-Tek stock are causing the market price of the stock to be quite volatile.s. 105Wicker Importers has total assets of $2,860. Treasury bills are yielding 5 percent. What is the value of the equity in this firm? 65.40
Martha B's has total assets of $1,750. 34.59One year from now, a stock is expected to be priced at either $36 or $49. 12-month call option with an exercise price of $40? 2.13Mostly Right, Inc. has assets that are currently valued at $1,500. risk-free rate of return is 4%. value of the equity? $208.33 You currently own a one-year call option on Way-One, Inc. stock. The current stock price is
$26.50 current value of your call option? 7,.27Flo's Florals has a pure discount bond that comes due in one year.. firm's assets will be worth either $1,200 or $1,500 in one year. What is the interest rate on the debt? 6%The current value of a firm is $1,400. The firm has $1,000 in pure discount debt due in one year and the risk-free rate is 6%. The firm's assets will be worth either $1,200 or
$1,500 in one year. What is the current value of the firm's equity? 457firm's debt? 943A firm has stock outstanding with a current price of $35 per share. $40 or $48. A call option on ONE share is available with an exercise price of $30. If the risk-free rate of interest is 6%, what would you pay for the call option? 6.70suppose a firm has a total market value of $900 and outstanding debt
with a face value of $850.what is the rate of return on the firm's debt? (Assume the bond makes no coupon payments during this time period.) 0.9%what is the value of the equity in the firm? $57.36 what is the value of the debt in the firm?$842.64 The assets of Jensen Explorers are currently worth $3,200. ..value of the equity in this firm? 318.45Ted's Welding Shop has a pure discount
bond with a face value of $5,000 ..$4,800 or $5,200 in one year.are worth $4,750. What is the current value of the bond? $4,671.65 Big Ed's Electrical has a pure discount bond 917.54Shares of a stock are currently priced at $28. The future price is expected to be either $27 or $32. The risk-free rate o…$4.19 Shares of a stock are currently priced at $61. The future price is estimated at
either $52 or $62. The risk-free rat…7.70A $1,000 5% annual coupon convertible bond is currently valued at $1,050. The discount rate is 5%. floor value of the bond? 40A $1,000 semi-annual convertible bond has a 4% coupon rate, a conversion ratio of 20, and five years to maturity. floor value of the convertible bond? 900You wrote ten call option contracts on JIG stock with a strike
price of $40 and an option price of $.40.-5650Davistown Enterprises ..value of the equity in Davistown Enterprises? 434.95The delta of a call option on a firm's assets is .804. This means that a $60,000 project will increase the value of equity by:$48,240. The delta of a call option on a firm's assets is .613. This means that a $35,000 project will increase the value of equity by: $21,455.
john and Randy form a company with assets worth $900.Should Cheri exercise the warrant? Yes gain 80 by excisingWhat is the intrinsic value of the option at maturity? 25The market price of Simpson Structures ..$34.20 on the day the options expire? -70Suppose you are evaluating a bond that can be exchanged for shares of the issuing company's stock at a conversion price of $5 per
share. What is the minimum value for which the bond should sell? 900 ppose an all-equity firm has a value of $10,000 and 100 shares outstanding. The firm has issued 25 warrants, warrants are exercised? 93.40What is the straight bond value? $1,034.32 What is the conversion value if the current stock price is $69.50?$1,070.30 What is the minimum value of this bond if the current stock
price is $69.50 per share? 1070.30The conversion premium for a convertible bond is computed using the formula:(Conversion price - current price)/current price A stock is currently selling for $43 a share. The risk-free rate is 6 percent and the standard deviation is 30 percent. What is the value of d
1
of a 6-month call option with a strike price of $45? .0332 A stock is currently selling
for $28 a share. The risk-free rate is 4.5 percent and the standard deviation is 35 percent. What is the value of d
1
of a 3-month call option with a strike price of $25? .7994Lucie wants to have the option to buy 1,000 .purchase: 10 callsn a given day, the rights to buy 160,000 shares of stock at …s traded on that day as: 1600You are evaluating a call option with an exercise price of $140.
The underlying stock has possible prices of $135 or $160t to replicate the stock? 1.25 callsMartin owns 15,000 shares…can receive at least $42.50 a share when he does sell, Martin could purchase 150 puts with a strike price of $42.50. What is the conversion ratio? 15.4The current market value of the assets of Kleiner, Inc. is $72 million, What is the value of d
1
? 2.61A 6% convertible
bond has a face value of $1,000 and a 6-year maturity. The conversion ratio is 13. Nonconvertible bonds with comparable risk are yielding 7%. The common stock is selling at $76 a share. What is the value of the conversion premium? 3.75%what was the conversion premium at issuance? 44.44Van, Inc. stock is selling for $38 a share. The 6-month 35 call on Van, compounded risk-free
rate of return? 6.50%European options is correct?A European option has value only if it is in-the-money at expiration. A call provision in the bond indenture. gives a firm the option to retire its bonds early.statements is correct? IftheMay30putonABCstockisinthemoneythentheMay30call on the same stock must be out of the money. statements is correct? An overallotment
option is effectively a call option granted to the underwriter. A ticket to a baseball game gives the holder the right, but not the obligation, to attend a specified game. Thus, a baseball ticket i European call option on the possession of a seat, which has an expiration date equal to day of the game. Which one of the following provides the option of selling a stock anytime during the
option a specified price even if the market price of the stock declines to zero? American putAn option issued by an individual that gives its owner the right to buy an asset at a fixed price on or before a given date is called a(n): AMERICAN call option An option that grants the right, but not the obligation, to sell shares of the underlying asset on a particular date at a specified price is
called: EUROPEAN PUTA local retail store allows you to return the merchandise you purchase and get your money back for up to 30 days after the purchase date. The store has, in effect, provided each shopper with AMERICAN PUT options. Today is March 10
th
. Jean just exercised her April option and received $450 in cash. Jean must have owned a(n): American put Jeff opted to
exercise his August option on August 10 .. have owned a(n): AMERICAN PUTA security issued by a firm that gives its owner the right to purchase new shares of stock at a fixed price over a given period of time is called a(n): American warrant decrease the value of a put option? An increase in the price of the stock A call option The right to buy an asset at a fixed price during a
particular period of time. A put option he right to sell an asset at a fixed price during a particular period of time. An American option can best be defined as: An option that can be exercised at any time until its expiration date European option…option that can be exercised only on the expiration date best defines an exercising the option? The act of buying or selling the
underlying asset via the option contract. expiration date? Last day on which an option can be exercised. employee stock option (ESO)? An option granted to an employee by a company giving the employee the right to buy shares of stock in the company at a fixed price for a fixed time. convertible bond? A bond that can be exchanged for a fixed number of shares of stock
for a specified amount of time. The intrinsic value of an option is the: Lower bound of the option's value Employee stock options: Are frequently granted on a regular basis such as quarterly or annually. f a call has a positive intrinsic value at expiration the call is said to be: In the money.A 35 put option on ABC stock expires today. The current price of ABC stock is $36. The put
is: out of the moneyemployee stock options are issued they are usually priced: at the moneyThe Black-Scholes option pricing model is: Based on European-style call and put options. vIn the Black-Scholes option pricing formula, N(d
1
) is the probability that a standardized, normally distributed random variable is: Less than or equal to d
1
Fred paid $.60 to buy a put option with a $20
strike price52-week ranges? Maximum net profit per share than Fred can earn is $7.40. Based on your research, you believe that Jet-Electro stock will rise by 130% Sell calls on Jet-Electro stock. Based on your research, you believe that the price of Jet-Electro stock will fall by 30% by the end of the year. As a rational investor, you should: Buy puts on jet electro stockn
employee stock option gives an employee the right to __buy___ shares of stock in the company at a fix price for a fixed period of time.If a call option is "in-the-money" on the expiration date, the: Call has an intrinsic value that is equal to the stock price minus the strike price.value of a call option that is expected to expire in the money can be expressed as: C
0
=S
0
-E/(1+R
f
)
t
.the
correct expression of the lower bound of a call option price prior to option maturity? c
0
isequaltothegreaterof(S
0
-E)orzero A warrant is most similar to a: call option difference between a warrant and a call option? Call options are issued by individuals while warrants are issued by firms. lower bound of a call option: can be equal to 0Warrants: Can usually be publicly traded.
CONVERSION VALUE is the current price of common stock multiplied by the number of shares of common stock that will be received upon conversion of a convertible bond. CONVERSION PRICE The dollar amount of a convertible bond's par value that is exchangeable for one share of stock is the bond's The number of shares of stock received for each convertible bond converted
into stock is called the cCONVERSION RATIOA bond that can be exchanged for a fixed number of shares of stock in a firm over a specified period of time is called a: convertible bond he difference between the conversion price of a convertible bond and the current stock price, divided by the current stock price, is called CONVERSION PREMIUM The value a convertible bond
would have if it could not be converted into common stock is called the STRAIGHT BOND VALUEThe value a convertible bond would have if it were to be immediately converted into common stock is called the conversion value. As the variance of the asset price decreases, the value of a call option decreases because: Downside risk doesn't change but the possible payoffs
decrease. Nine months ago, Zena, Zena will: lose 62statements is true? Common stock acts like a call option on the assets of a levered firm. The upper bound on the market value of a call option is the underlying and the lower bound is intrinsic valueLIf you consider the equity of a firm to be an option on the firm's assets then the act of paying off debt is comparable to _____ on the
assets of the firm. exercising an in-the-money call option The conversion value of a convertible bond is computed as the Conversion ratio multiplied by the price of the stock. You own both a May 20 call and a May 20 put. put will Finish out of the money. An option based on an underlying asset such as a building or land is called a real option. Three weeks ago, you sold an IBM
September $110Sell an additional call option contract for $9.75 A financial contract that gives its owner the right, but not the obligation, to buy or sell a specified asset at an agreed-upon price on or before a given future date is called a option contract Employee stock options Are usually forfeited if an employee leaves a firm shortly after the options are granted. A put option _ at
the fixed price during a stated period of time.grants the option buyer the right to sell A convertible bond: Has a minimum value which is equal to the greater of the two floor values. If you sell a call option on a stock that you don't own youMay be forced to sell the underlying stock at a fixed price if the option is exercised against you. In July, you purchase a September 75 put option
on Keebler, Inc. negative cash flow at the time you initiate the contract and positive when the option expires if stock price less than 75 at the time.A stock has a call with a strike price of $25 that expires four days from now. If the call is a European call, the call will never be exercised. value of an option is equal to the: Time premium plus the intrinsic value CONVERSION
RATIO:Number of shares of stock that can be received in exchange for one bond. Last week, Alfonso purchased a three-month put option on shares of DOG stock. This week DOG shares declined in price and the rate on Treasury bills also declined. As a result of these two events, with all else constant, the value of Alfonso's options: Increased in value as a result of both events
value of call option: Increases as the price fluctuation of the underlying security increases. following will cause the value of a call to decrease? lowering the risk level of the underlying security or //Decreasing the market value of the underlying security A security that gives the holder the right, but not the obligation, to purchase shares of stock in a firm for a fixed price over a
specified period of time is called a(n): warrant WARRANT…Requires the firm to issue new shares of stock when it is exercised. warrant generally…Separated from the security they were originally attached to and then traded. The minimum floor value of a convertible bond: Is the greater of the straight bond value or the conversion value. The intrinsic value of a put Increases
as the value of the underlying asset decreases. FAL SE ? As the price of a stock falls, the value of a put option on the stock also falls. INSTRIC VALUE OF PUT = Greater of the strike price minus the stock price or zero. The maximum value of a convertible bond is theoretically: unlimited ~~Options with payoffs in real goods, as opposed to asset prices are known as
managerial options A trading opportunity that offers a riskless profit is called a arbitage The Bentwater Co. just repriced the firm's employee stock options indicates that the: Market value of the stock has declined significantly.The intrinsic value of a call option is defined as: max[S
0
-E,0] Sue just sold 1,500 American calls. This transaction: Obligates Sue to sell 150,000 shares if
the option is exercised by the expiration date. The buyer of a European call option has the:Right but not the obligation to buy a stock at a specified price on a specified date. The act where an owner of an option buys or sells the underlying asset, as is their right, is called excising the option. An option that can only be exercised on the expiration date is called a(n): euro style option
A firm which issues put bonds is agreeing to:Borrow money under the condition that it can be repaid…For the equity of a firm to be considered a call option on the firm's assets, the firm must: be leveraged Convertible bonds: Generally provide a call option both to the issuer and to the bondholder. To protect their investment, bondholders could _purch put option _ with an
exercise price equal to the amount of the debt.You know for certain that a common share of Mystical Inc., worth $25 today, Purchase a call option on the stock with a strike price of $25 A firm has a zero-coupon bond issue outstanding with a face value of $12 million, a current market value of $8 million, and a maturity date of 5 years. Call option with a strike price of $12 million A
_CALL is a derivative security that gives the owner the right, but not the obligation TO BUY …PUT OPTION s a derivative security that gives the owner the right, but not the obligation, to sell an asset at a fi The value of a risk-free bond can be duplicated by combining a risky bond with a _____ option on the assets of the firm with a _______ maturity date and a strike price _____ to
the face value of the bond. Put; matching; equalAngelina sold 100 puts on a stock at a price of $1.20.Angelina will:Pay a net cost of $188,000 to buy her shareEmployee stock options are designed to: align shareholder with employee goals The buyer of a European put has the right but no obligation to sell..on expireThe seller of an American call has the: obligation to sell son or
before expiration date, if buyer exercises optionZXC stock is currently priced at $42.27 a share fred should ell the shares directly at the market price Peter owns ten European DFG 25 calls with an expiration date in September. Peter bought the calls at a price of $1.05. Today the 25 calls are priced at $13.40. Yesterday, June 14
th
, DFG stock doubled in price to $42.80 a share. Today
the stock is selling for $37.30 a share. Peter wants to profit from this sudden price surge before the price falls further. Ignore commissions and trading costs. Peter should: Sell his options and earn a net profit of $12,350. A _____ is a _____ on the assets of a leveraged firm. Stock, call optionThe slope of the conversion value line for a convertible bond is equal to the: conversion ratio
The price at which a call option is exercised is called the STRIKE_ priceThe lower bound on a call's value is either the: Stock price minus the exercise price or zero, whichever is greateR The fixed price in an option contract at which the owner can buy or sell the underlying asset is called the option's STRIKE PRICE true regarding convertible bonds ?The floor price of a
convertible bond is the greater of the straight bond value and the conversion value. If a call is in the money on the expiration date then: The intrinsic value of the call is positive. striking price? The fixed price in the option contract at which the holder can buy or sell the underlying asset. Also the exercise price or strike price. Expiration date? The last day on which an option can
be exercised.Exercising the option can best be defined as: act of buy-in or selling via contract…Option Delta ..chnge in stock price / change in call price Equity kickers …A feature included in the terms of a new issue of debt or preferred shares to make the issue more attractive to initial investors true American options? The lower the risk of the underlying security, the lower
the value of a call option. vtrue for a firm with positive earnings? Fully diluted earnings per share with either warrants or convertible bonds will be lower than earnings per share based only on shares presently outstanding. Because possible loss on a share of common stock…, equity in a leveraged firm can be considered a call option on the firm's assets. The present value of
the strike price can be defined as: T-bill with a face value equal to the strike price. Nd2 = The probability of a value that is less than or equal to d
2
, given a standardized normally distributed random variable. formula C = [N(d
1
)] - [E][N(d
2
)]/(1 + R
f
)
t
defines: black scholars opt price model The time value of an option is equal to: The difference between the option's market price
and its intrinsic value. The upper bound of a call's value is eq = STOCKWhen a call is out of the money then its intrinsic value is equal = 0maximum value of a call option is equal to price of the underlying stock. Assume that you own both a May 40 put and a May 40 call on ABC stock. Which one of the following statements is correct concerning your option positions? Ignore taxes and
transaction costs. The time premium on both your put and call are less than the time premiums on equivalent June options. option? a contact that gives right to b or s sine asset at fixed price before given time intrinsic value? The lower bound of an option's value, or what the option would be worth if it were about to expire. real option = An option with payoffs in real goods
option value …march 30 inversely primary difference between an American option and a European option is the TIME CAN BE EXERCISED TRUE AMERICAN OPTIONS? The lower bound on the price of a call option on stock could be zero. When warrants are exercised, the: Earnings per share decrease. The value of an option if it were to immediately expire, that is, its
lower pricing bound = jnstitric value You are shopping for a new home..a REAL CALL on House A. Warrant true? Warrants are usually issued in conjunction with a security offering OR PRIVATELY PLACED BONDSYou own stock in a firm that has a pure discount loan due in six month CALL 50,000option on the assets of the firm with a strike price of: WARRANTS are
frequently offered as a sweetener by firms in combination with private placements of bonds or loans. Webster United Movers has a $10,000Will allow their call option on the firm to expire. If you exercise a put option prior to expiration you Sell the asset underlying the option contract at the option strike price All else the same, the value of an American call option decreases with
decreases in the risk-free interest rate A put option you own is going to expire in one second. The current stock price is $25 and the strike price of your option is $30. NOT true? someone other than you gains 5 per share when option excised A call can never be worth less than zero nor worth more than stock price
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Document Summary
Chapter 25- options and derivatives - one call option , put option , option price , instrinic value, strike, option on ur investment? current conversion value , straight bond value conversion price fave value percent. Coupon market value of rms debt value of equity pure discount debt oor value warrants d1. shyou own one call option with an exercise price of on nadia interiors stock. 2. 59you currently own a one-year call option on mayer industries stock. sh. 71 a ,000 bond has a conversion value of a share. . 25 a convertible bond has a face value of ,000 and a conversion price of . 50. the current price of the stock is . 24. 863. 22a convertible bond has a face value of ,000 and a conversion price of the current price of the stock is . 74. 970. 32a convertible bond has a face value of ,000 and a conversion price of . 50. The current price of the stock is . 24.
