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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%
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