5. February 4, 2022, Hamdan, Inc., had outstanding employee stock options representing over 272 million...
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5. February 4, 2022, Hamdan, Inc., had outstanding employee stock options representing over 272 million shares of its stock. Hamdan accountants estimated the value of these options using the Black-Scholes Merton formula and the following assumptions: S= current stock price =$20.72 K= option strike price =$23.15 r= risk-free interest rate =.043 = stock volatility =.29 T= time to expiration =3.5 years Suppose you hold Hamdan employee stock options representing options to buy 10.000shares of LLL stock. You wish to hedge your position by buying put options with three-month expirations and a $22.50 strike price. Required a. What was the estimated value of these employee stock options per share of stock? (Note. Hamdan pays no dividends.) b. How many put option contracts are required
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