Solved: What will be the payoff of the call, Accounting Basics

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What will be the payoff of the call

Scenario: You own a call option on Intuit stock with a strike price of $40. The option will expire in exactly three months time.

Questions:

a. If the stock is trading at $55 in three months, what will be the payoff of the call?

b. If the stock is trading at $35 in three months, what will be the payoff of the call?

c. Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.

Please answer by using Excel.

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