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The common shares are trading for $90 a share. You have employee stock options to purchase 1,000 shares for $85 per share. The options mature in three years. The annualized vitality of stock over the past 100 days has been 25 percent. The company's current dividend yield is 1.5 percent, and the interest rate is 6 percent. (Assume that the options are American options that may be exercised at any time up to maturity date.) Is the strike price $90? if not what is the strike price?

The common shares are trading for $90 a share. You have employee stock options to purchase 1,000 shares for $85 per share. The options mature in three years. The annualized vitality of stock over the past 100 days has been 25 percent. The company's current dividend yield is 1.5 percent, and the interest rate is 6 percent. (Assume that the options are American options that may be exercised at any time up to maturity date.)

Is the strike price $90? if not what is the strike price?

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The rule and answer are given.

$2.19