What is the call option premium given the following information?
$\begin{array}{lr}
\text { Stock price } & \$ 36.00 \
\text { Strike price } & \$ 30.00 \
\text { Volatility } & 16\% \
\text { Pividend Yield } & 0 \
\text { Time (years) } & .75\
\text { Rigk-free Rate }&2.70\%
\end{array}$

A)$5.91
B)$6.28
C)$6.75
D)$6.90
E)$7.13

Question

What is the call option premium given the following information?
$\begin{array}{lr}
\text { Stock price } & \$ 36.00 \
\text { Strike price } & \$ 30.00 \
\text { Volatility } & 16\% \
\text { Pividend Yield } & 0 \
\text { Time (years) } & .75\
\text { Rigk-free Rate }&2.70\%
\end{array}$

A)$5.91
B)$6.28
C)$6.75
D)$6.90
E)$7.13

Quizplus · Accepted Answer

The call option premium can be found by subtracting the strike price from the current stock price and then subtracting any dividends and interest that will be received on the stock before the option expires. In this case, the call option premium is calculated as (43.60 - 40.00 - 0) = 3.60. The option premium is then multiplied by 100 (the number of shares per option contract) for a total premium of $360. Therefore, the correct answer is C) $6.75, which is the closest to $360.

What Is the Call Option Premium Given the Following Information