#### Description of this paper

##### The price of a stock is $51. You can buy 6 month c...

**Description**

Solution

**Question**

The price of a stock is $51. You can buy 6 month call at $50 for $5 or a six month put a $50 for $2. a) What is the intrinsic value of the call? b) What is the intrinsic value of the put? c) What is the time premium paid for the call? d) What is the time premium paid for the put? e) If the price of the stock falls, what happens to the value of the put? f) What is maximum you could lose by selling the call covered? g) What is the maximum possible profit if you sell the stock short? After six months, the price of the stock is $58. h) What is the value of the call? i) What is the profit or loss from buying the put? j) If you had sold the stock short six months earlier, what would your profit or loss be? k) If you sold the call covered, what would your profit or loss be?,thank you

Paper#5655 | Written in 18-Jul-2015

Price :*$25*