Perpetual Call Option

Finance Junkie
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Joined: Mon Sep 17, 2012 11:06 am

Perpetual Call Option

Postby swarnendupathak » Wed Oct 31, 2012 10:24 am

The current price of the share of Company A is Rs. 100 & they pay no dividend. Interest rate is 6% p.a. (30/360), what is the approximate price of the perpetua call option with a strike price of Rs. 100 on 1 share of Company A, if the call will be automatically exercise when the stock reaches Rs. 150.
(a) 18
(b) 25
(c) 33
(d) 50
Please highlight how to value perpetual call & how to solve this problem.



Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

Re: Perpetual Call Option

Postby content.pristine » Wed Oct 31, 2012 5:29 pm

Perpetual Call Options are no longer in the syllabus so don't worry about it..
Where did you get this question?


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