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Burka [1]
3 years ago
7

You have written a call option on Walmart common stock. The option has an exercise price of $89, and Walmart’s stock currently t

rades at $87. The option premium is $1.35 per contract. a. How much of the option premium is due to intrinsic value versus time value? b. What is your net profit if Walmart’s stock price decreases to $85 and stays there until the option expires? c. What is your net profit on the option if Walmart’s stock price increases to $95 at expiration of the option and the option holder exercises the option?
Business
1 answer:
Alexandra [31]3 years ago
7 0

Answer:

A. Intrinsic value is 0. Time value is 1.35.

B. 1.35

C. -4.65

Explanation:

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3 years ago
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