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61.
You sold one call option contract with a strike price of $55 when the option
was quoted at $0.80. The option expires today when the value of the
underlying stock is $53.70. Ignoring trading costs and taxes, what is the net
profit or loss on this investment?
62.
You sold three $35 call option contracts at a quoted price of $1.40. What is
your net profit or loss on this investment if the price of the underlying asset
is $38.10 on the option expiration date?
63.
You wrote eight call option contracts with a strike price of $42.50 at a call
price of $1.35 per share. What is your net gain or loss on this investment if
the price of the underlying stock is $40.30 per share on the option expiration
date?
64.
The market price of Southern Press stock has been relatively volatile and
you think this volatility will continue for a couple more months. Thus, you
decide to purchase a two-month European call option on this stock with a
strike price of $45 and an option price of $2.00. You also purchase a two-
month European put option on the stock with a strike price of $45 and an
option price of $0.30. What will be your net profit or loss on these option
positions if the stock price is $48 on the day the options expire? Ignore
trading costs and taxes.
65.
Several rumors concerning Value Rite stock are causing the market price of
the stock to be quite volatile. Given this situation, you decide to buy both a
one-month European $25 put and a one-month European $25 call on this
stock. The call price per share is $0.60 and the put price per share is $2.10.
What will be your net profit or loss on these option positions if the stock
price is $18 on the day the options expire? Ignore trading costs and taxes.
66.
Three months ago, Central Supply stock was selling for $51.40 a share. At
that time, you purchased five put options on the stock with a strike price of
$52 per share and an option price of $0.60 per share. The option expires
today when the value of the stock is $42.70 per share. What is your net
profit or loss on this investment? Ignore trading costs and taxes.
67.
You wrote two put options on Xylo stock with an exercise price of $30 per
share and an option price of $1.05 per share. Today, the contracts expire
and the stock is selling for $31.15 a share. What is your net profit or loss on
this investment? Ignore trading costs and taxes.
68.
You sold ten put contracts on Cross Town Bank stock at an option price per
share of $0.85. The options have an exercise price of $39 per share. The
options were exercised today when the stock price was $34 a share. What is
your net profit or loss on this investment assuming that you closed out your
positions at a stock price of $34? Ignore transaction costs and taxes.
69.
You own eight call option contracts on Swift Water Tours stock with a strike
price of $15. When you purchased the shares the option price was $0.30
and the stock price was $15.25. What is the total intrinsic value of these
options if the stock is currently selling for $16.08 a share?
70.
You recently purchased three put option contracts on Guillepsi stock with
an exercise price of $42.50. What is the total intrinsic value of these
contracts if the stock is currently selling for $45 a share?
71.
Last week, you purchased a call option on Edgewater stock with a strike
price of $40. The stock price was $39.80 and the option price was $0.45 at
that time. What is the intrinsic value per share if the stock is currently
priced at $39.10?
72.
Three weeks ago, you purchased a June $30 put option on Leeper Metals
stock at an option price of $1.80. The market price of the stock three weeks
ago was $30.60. Today, the stock is selling at $27.50 a share. What is the
intrinsic value of your put contract?
73.
This morning, you purchased a call option on Schoolhouse Supply Co. stock
that expires in one year. The exercise price is $40. The current price of the
stock is $43.40 and the risk-free rate of return is 3.6 percent. Assume the
option will finish in the money. What is the current value of the call option?
74.
You currently own a one-year call option on Rail Company, Inc., stock. The
current stock price is $52.75 and the risk-free rate of return is 4.25 percent.
Your option has a strike price of $50 and you assume the option will finish
in the money. What is the current value of your call option?
75.
The common stock of Hazelton Refiners is selling for $72.30 a share. U.S.
Treasury bills are currently yielding 4.8 percent. What is the current value of
a one-year call option on this stock if the exercise price is $70 and you
assume the option will finish in the money?
76.
The common stock of Westover Foods is currently priced at $28.80 a share.
One year from now, the stock price is expected to be either $25 or $30 a
share. The risk-free rate of return is 4.2 percent. What is the current value
of one call option on this stock if the exercise price is $27.50?
77.
You own one call option with an exercise price of $40 on S'more Good
stock. The stock is currently selling for $41 a share but is expected to sell
for either $37 or $43 a share in one year. The risk-free rate of return is 4.25
percent and the inflation rate is 3.6 percent. What is the current call option
price if the option expires one year from now?
78.
The assets of Uptown Stores are currently worth $138,000. These assets
are expected to be worth either $120,000 or $150,000 one year from now.
The company has a pure discount bond outstanding with a $130,000 face
value and a maturity date of one year. The risk-free rate is 4.3 percent.
What is the value of the equity in this firm?
79.
Electronic Importers has a pure discount bond with a face value of $25,000
that matures in one year. The risk-free rate of return is 3.8 percent. The
assets of the business are expected to be worth either $23,000 or $35,000
in one year. Currently, these assets are worth $27,500. What is the current
value of the bond?
80.
The Glass House has total assets currently valued at $17,300. These assets
are expected to increase in value to either $18,000 or $21,000 by next year.
The company has a pure discount bond outstanding with a face value of
$20,000. This bond matures in one year. Currently, U.S. Treasury bills are
yielding 5.4 percent. What is the value of the equity in this firm?
