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Corporate Finance · End Term · 10 May 2026 · January 2026 term · Set 1

Question 31: A stock is trading at Rs 80 today. In six months, the st…

Question 31

+4 marksNumerical answer

A stock is trading at Rs 80 today. In six months, the stock price can either increase to Rs 100 or decrease to Rs 70. The six-month risk-free rate is 5%. A six-month call option has an exercise price of Rs 90. What would it cost (in Rs) to buy 100 such call options? (Round off to the nearest integer)

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Correct answer: 445 (accepted within ±5)

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Question 31 of 35 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 10 May 2026, in the January 2026 term (Corporate Finance 06 May 26). It carries 4 marks.

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