Calculate the elasticity of a call option with a premium of $6.50 and a strike price of $61. The call has a hedge ratio of 0.7, and the underlying stock’s price is currently $47.

The Elasticity of the call option =

Explanation:

From the given information:

For $1 change in stock price

the percentage  of change in stock price = ΔS/S

ΔS/S = (1× 100)/47 = 2.127659574

ΔC = hedge ratio × ΔS

ΔC = 0.7 × 1

ΔC = 0.7

However , the percentage change in the stock call option price = ΔC/C

= (0.7 × 100) / 6.50

= 70/6.50

= 10.76923077

∴

The Elasticity of the call option =

The Elasticity of the call option =

The Elasticity of the call option =

       OR

The Price Elasticity of the call option can be computed by using EXCEL FUNCTION(=B3*(B4/B1))

The illustration to that can be seen in the diagram attached below.

The Elasticity of the call option   5.06% by using EXCEL FUNCTION.

there's 11 people for the 1st position. then, no matter who gets it, there's only 10 left for the second, and then 9 left for the third. 11 x 10 x 9 = 990.   the answer is there are 990 different ways the positions can be filled by these applicants