Given the following information,
a. The intrinsic value of the call is _________.
b. The intrinsic value of the put is _________.
c. The time premium paid for the call is _________.
d. The time premium paid for the put is _________.
At the expiration of the options (i.e., after six months have lapsed), the price of the stock is $45.
e. The profit (loss) from buying the call is _______.
Definitions:
Annual Income
The total amount of money earned or received in a year from employment, investments, or other sources before taxes and deductions.
Symmetrical
Symmetrical refers to an object or design that is evenly proportioned and balanced in size and shape on both sides.
Bell-shaped Distribution
A graphical representation of data where most values cluster around a central region, with fewer and fewer appearing as one moves away towards the extremes; commonly known as a normal distribution.
Normal Curve
A symmetrical, bell-shaped curve that represents the distribution of many types of data where most scores fall near the middle, with fewer scores at the extremes.
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