Audrey is considering an investment in Morgan Communications, whose stock curren

Question

Audrey is considering an investment in Morgan Communications, whose stock currently sells for $65. A put option on Morgan's stock, with an exercise price of $56, has a market value of $4.38. Meanwhile, a call option on the stock with the same exercise price and time to maturity has a market value of $9.81. The market believes that at the expiration of the options the stock price will be either $70 or $50, with equal probability. e.If Audrey buys 0.85 share of Morgan Communications and sells one call option on the stock, What is the total value of her portfolio under each scenario? Round your answers to two decimal places. $50: $ $70: $

Explanation / Answer

check this out your answer is at Fundamentals of Financial Management - Page 613 - Google Books Result books.google.com/books?isbn=0324319819

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