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Smith Enterprises stock currently sells for $1750 A call option on the stock has a strike price of $20 and currently sells at What is the time value of the option

Smith Enterprises stock currently sells for $17.50. A call option on the stock has a strike price of $20 and currently sells at $4.50. What is the time value of the option?

a.$0

b.$2.50

c.$2

d.$4.50

12.Smith Enterprises stock currently sells for $17.50. A put option on the stock has a strike price of $20 and currently sells at $4.50. What is the time value of the option?

a.$0

b.$2.50

c.$2

d.$4.50

13.Smith Enterprises stock currently sells for $17.50. A put option on the stock has a strike price of $20 and currently sells at $4.50. What is the intrinsic value of the option?

a.$0

b.$2.50

c.$2.00

d.$4.50

14.Suppose you bought 10 Smith Enterprise call options with a strike price of $52 at $2.75 per option. If the price of Smith stock is $50, what is your net profit (or loss)? Ignore transaction costs.

a.$0

b.-$27.50

c.$27.50

d.$500

15.Suppose you bought 10 Smith Enterprise put options with a strike price of $52 at $2.75 per option. If the price of Smith stock is $48, what is your net profit (or loss)? Ignore transaction costs.

a.$40

b.$0

c.$12.50

d.-$27.50

16.Suppose you bought 10 Smith Enterprise put options with a strike price of $52 at $2.75 per option. If the price of Smith stock is $56, what is your net profit (or loss)? Ignore transaction costs.

a.$40

b.$0

c.-$27.50

d.$12.50

17.Suppose you bought 10 Smith Enterprise call options with a strike price of $52 at $2.75 per option. If the price of Smith stock is $56, what is your net profit (or loss)? Ignore transaction costs.

a.$0

b.$12.50

c.-$27.50

d.$40

18.A call option with a $50 strike price on Bavarian Sausage stock will expire in one year. If you know that the risk free rate is 4%, that the stock currently sells at $47 and the put on the same stock has a value of $2.75, what is the price of the call?

a.$2.75

b.$3.56

c.$1.67

d.$5.36

19.A put option with a $50 strike price on Bavarian Sausage stock will expire in one year. If you know that the risk free rate is 4%, that the stock currently sells at $47 and the call on the same stock has a value of $2.75, what is the price of the put?

a.$4.67

b.$2.75

c.$3.83

d.$1.56

20.A put option with a $50 strike price on Bavarian Sausage stock will expire in one year. If you know a call on the same stock has a value of $2.75, that the price of the put is $1.26 and the stock is currently selling at $47, what is the implied risk free rate?

a.4.56%

b.3.07%

c.5.43%

d.9.87%

Feb 13 2020 View more View Less

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