Essay
The CEO of NuValue was granted 1,000,000 options. The stock price at the time of the granting of the options was $45 and the options are at the money. The risk free rate was 5% and the options expire in 5 years. The variance on the stock is .04. What is the value of the options contract?
If he had negotiated a larger salary and only 10,000 options,what would be the value of the options contract?
Correct Answer:
Verified
d1 = [.05 + (.50 ×.04)(5)]/√(.04)5
d1 = .3...View Answer
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Correct Answer:
Verified
d1 = .3...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
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