Questions and Problems

Calculating Option Values T-bills currently yield 6 percent. Stock in Christina Manufacturing is currently selling for $50 per share. There is no possibility that the stock will be worth less than $45 per share in one year.

a. What is the value of a call option with a $40 exercise price? What is the intrinsic value?

b. What is the value of a call option with a $30 exercise price? What is the intrinsic value?

c. What is the value of a put option with a $40 exercise price? What is the intrinsic value?

Understanding Option Quotes Use the option quote information shown here to answer the questions that follow.

Option and NY Close

Strike Price

Expiration

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