Walter Maxim, the CEO of Digital Storage Devices Has Been

question 31

Essay

Walter Maxim, the CEO of Digital Storage Devices has been granted options on 300,000 shares. The equity is currently trading at £27 a share and the options are at the money.The volatility of the equity has been about .15 on an annual basis over the last several years.The option mature in 5 years, become exercisable in 3 years, and the risk free rate is 4%. What is the value of Mr.Maxim's options?

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Definitions:

Reserves

Assets kept on hand by a bank or financial institution to meet emergency needs or regulatory requirements.

Transactions Demand

The demand for money for the purpose of carrying out transactions or day-to-day expenditures.

Medium Of Exchange

An intermediary instrument, such as currency or digital tokens, used to facilitate the sale, purchase, or trade of goods and services between parties.

Small CDs

Compact discs used for storing digital data, typically with smaller capacity than standard CDs, used for various types of media or data storage.