The Executive Janitor of NuValue Was Granted 1,000,000 Options

Question

Examlex · Accepted Answer

The Answer is d₁ = [.03 + (.50 ×.04)(3)]/√(.04)3
d₁ = .15/.3464 = .433
d₂ =d₁ - √σ²t
= .433- √(.04)3
= .433 - .3464 = .0866
N(d₁) = .50 + .1686 = .6686
N(d₂) = .50 + .0353 = .5353
e^-.03(3) = .9139
C = $25 (.6686) - $25(.5353)(.9139)
= $16.715-$12.23629
= $4.48 per share
The value of the options contract for 1,000,000 options is
1,000,000($4.48) = $4,480,000

The Executive Janitor of NuValue Was Granted 1,000,000 Options

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The Executive Janitor of NuValue Was Granted 1,000,000 Options

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified