1. A call option has an exercise price of $60.00 and a stock price of $58.00. If the call option is trading for $8.00, what is the time value of the option?
2. Commercial banks want to be in the investment banking business. What do they see as the main advantages of participating in investment banking? What is the consequence if a commercial bank is not in the investment banking space and the competitors are?
3. State the MM Propositions I and II with and without corporate taxes. What is the implication of corporate taxes for the value of the firm?