The following quotes were observed for options on a given stock on November 1 of a given year. These are American calls except where indicated. Use the information to answer questions 7 through 20.
The stock price was 113.25. The risk-free rates were 7.30 percent (November) , 7.50 percent (December) and 7.62 percent (January) . The times to expiration were 0.0384 (November) , 0.1342 (December) , and 0.211 (January) . Assume no dividends unless indicated.
-What is the intrinsic value of the November 105 put?
Definitions:
Call Provision
Agreement giving the corporation the option to repurchase the bond at a specified price before maturity.
Bond Indenture
A legal contract detailing the terms and conditions under which bonds are issued, including the interest rate, maturity date, and other conditions.
Time Premium
The portion of an option's price that exceeds its intrinsic value, reflecting the value of time left until expiration.
Exercise Price
The price at which an option holder can buy or sell the underlying security.
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