Use the Table for the Question(s)below

question 26

Essay

Use the table for the question(s)below.
Consider the following information on options from the CBOE for Merck:
-You have decided to sell (write)five January 2009 put options on Merck with an exercise price of $45 per share.How much money will you receive and are these contracts in or out of the money?

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Definitions:

Measurement Date

The specific date at which the values of assets and liabilities are determined in the preparation of financial statements.

Stock Appreciation Rights

A type of employee compensation linked to the increase in the company's stock price over a set period, allowing employees to profit from the appreciation without owning the stock.

Compensation Expense

The total cost incurred by a business for the payment of salaries, wages, benefits, and other forms of compensation to employees.

Options Pricing Model

A mathematical model used to determine the theoretical value of options, taking into account factors like the stock price, strike price, and volatility.