Value of premium over and above exercise value, Finance Basics

+44 141 628 6080
[email protected]

Value of premium over and above exercise value

The strike price on one of ORNE Corporation's call options is $35 and the price of the underlying stock is $34. The option will expire in 55 days. The option is currently selling for $0.25.

a. Calculate the option's exercise value?

b. Calculate the value of the premium over and above the exercise value? What does this value represent?

c. Is this an out-of-the money option, at-the-money, or in-the-money? Why?

d. What will happen to the value of the option if the underlying stock price changes to $34.50? Why?

e. If Orne Corporation had issued a put option (instead of the call), would it have a greater or lesser value than the call option? Why?

View Complete Question

Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Value of premium over and above exercise value

Reference No:- TGS038453

Expected delivery within 24 Hours

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Recent Questions Asked Finance Basics

Q : Determine amount of dividends paid to common-preferred stock

Please determine the amount of dividends paid to common and preferred stock for each scenario presented above.

Q : What is the incidence of the tax on consumers

The monopoly optimum and the welfare of consumers the monopoly and society(where society's includes tax revenue)? what is the incidence of the tax on consumers.

Q : Rental business for an assortment of vehicles

Lily exchanges a small storage shed she uses in her rental business for an assortment of vehicles and tools owned by Kendall, which she will use in her rental business.

Q : Economist-s definition of perfectly competitive industry

Of the products sold in the industry, over 90% have 10 years of patent protection remaining. Does this industry meet an economist's definition of a perfectly competitive industry?

Q : Value of premium over and above exercise value

Calculate the option's exercise value? Calculate the value of the premium over and above the exercise value? What does this value represent? Is this an out-of-the money option, at-the-money, or in-the-money? Why?

Q : Computing value of depreciation expense

Density Farms, Inc. had sales of $500,000, cost of goods sold of $180,000, selling and administrative expense of $70,000, and operating profit of $90,000. What was the value of depreciation expense?

Q : How much foam insulation firm plan to maximize profit

To maximize profit, how much foam insulation should firm S plan to produce and sell? What price should it charge? Compute the firm's total profit.

Q : Depreciation of the equipment

On january 1, 2004, Mill Corporation purchased for #314,000, equipment having a useful life of ten years and an estimated salvage value of @18,000. Mill has recorded monthly depreciation of the equipment on the straight-line method.

Q : Competitiveness and collaboration in global economy

In terms of understanding competitiveness and collaboration in a global economy, research, explore, and discuss the "Norwalk Agreement" between the FASB and the International Accounting Standards Board (IASB).

1926682

Questions
Asked

3,689

Active Tutors

1427538

Questions
Answered

Start Excelling in your courses, Ask a tutor for help and get answers for your problems !!

ask Question

Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Value of premium over and above exercise value

Reference No:- TGS038453

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Determine amount of dividends paid to common-preferred stock

Q : What is the incidence of the tax on consumers

Q : Rental business for an assortment of vehicles

Q : Economist-s definition of perfectly competitive industry

Q : Value of premium over and above exercise value

Q : Computing value of depreciation expense

Q : How much foam insulation firm plan to maximize profit

Q : Depreciation of the equipment

Q : Competitiveness and collaboration in global economy

Is early food experiences can impact development

Discuss three ethical guidelines that are important

Examine historical literature to the most current period

Describe the results, including any scores

How we perceive objects in the real world

Why you feel unpleasantly hot and sweaty

Identify one antecedent, one behaviour, and one consequence

Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Value of premium over and above exercise value

Reference No:- TGS038453

Recent Questions Asked Finance Basics

Q : Determine amount of dividends paid to common-preferred stock

Q : What is the incidence of the tax on consumers

Q : Rental business for an assortment of vehicles

Q : Economist-s definition of perfectly competitive industry

Q : Value of premium over and above exercise value

Q : Computing value of depreciation expense

Q : How much foam insulation firm plan to maximize profit

Q : Depreciation of the equipment

Q : Competitiveness and collaboration in global economy

Asked Questions