Homework Clinic

Social Science Clinic => Business => Finance => Topic started by: appyboo on Apr 25, 2021

Title: Consider a call option on shares of Prestige Worldwide with a strike price of $575. The option ...
Post by: appyboo on Apr 25, 2021

Question 1

Consider a call option on shares of Prestige Worldwide with a strike price of $575. The option currently trades for a premium of $13.75. Prestige Worldwide shares are currently trading for $565. What is the break-even price for a long call position?
◦ $565
◦ $575
◦ $578.75
◦ $588.75

Question 2

Consider a call option on shares of Prestige Worldwide with a strike price of $575. The option currently trades for a premium of $13.75. Prestige Worldwide shares are currently trading for $565. What is the maximum profit that a call writer can earn on such an option?
◦ $13.75
◦ $551.25
◦ $575.00
◦ Unlimited upside

Title: Consider a call option on shares of Prestige Worldwide with a strike price of $575. The option ...
Post by: dpost18 on Apr 25, 2021

Answer 1

$588.75

Answer 2

$13.75