Risk Management: Options
Not what you're looking for?
1. A call option on Futura Corporation stock currently trades for $4. The expiration date is February 18 of next year. The exercise price of the option is $45.
a. If this is an American option, on what dates can the option be exercised?
b. If this is a European option, on what dates can the option be exercised?
c. Suppose the current price of Futura Corporation stock is $35. Is this option worthless?
2. The strike price of a call option on Simpsons Entertainment common stock is $50.
a. What is the payoff at expiration of this call if, on the expiration date, Simpsons stock sells for $55?
b. What is the payoff at expiration of this call if, on the expiration date, Simpsons stock sells for $45?
Purchase this Solution
Solution Summary
Answers to questions on payoff at expiration of options, dates the option be exercised.
Solution Preview
1. A call option on Futura Corporation stock currently trades for $4. The expiration date is February 18 of next year. The exercise price of the option is $45.
a. If this is an American option, on what dates can the option be exercised?
If this is an American option it can be exercised on any day upto the expiration date i.e. February 18 next year
b. If this is a European option, on what dates can the option be exercised?
If this is an European option it ...
Purchase this Solution
Free BrainMass Quizzes
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.