Assume That the Current Price of FGX Stock Is $35,that

question 4

Essay

Assume that the current price of FGX stock is $35,that a 6 month call option on the stock has a strike or exercise price of $33.00,the risk free rate is 4%,and that you have calculated N(d₁)as .65 and N(d2)as .55.Use the Black-Scholes model to calculate the price of the option.

---

Definitions:

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an asset not yet sold.

Investment Account

An account that holds securities, cash, and other assets managed by a financial institution or individual.

After-Tax Dollar Value

The amount of money remaining from earnings, investments, or transactions after all applicable taxes have been deducted.

Realized Profits

Profits that are actually made from completed transactions, as opposed to unrealized profits from increases in value.