Walter Maxim, the CEO of Digital Storage Devices Has Been

question 17

Essay

Walter Maxim, the CEO of Digital Storage Devices has been granted options on 300,000 shares. The stock is currently trading at $27 a share and the options are at the money. The volatility of the stock 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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