Final answer:
To accurately determine the value of the call option and the profit or loss, the market price after three months is needed. It depends on whether this market price is above the exercise price and by how much, less the premium paid for the option.
Step-by-step explanation:
To determine the value of the call option for a stock with an exercise price (E) of Sh.100, given a market price per share after three months and a premium per call option of Sh.10, you would need to know the specific market price per share after three months to calculate the intrinsic value of the call option. The intrinsic value is the difference between the market price (S) and the exercise price (E) when the market price is higher than the exercise price. If the market price is below the exercise price, the intrinsic value is zero, as the option would not be exercised.
The profit or loss from exercising the option is the intrinsic value minus the premium paid for the option. If S > E, profit (loss) = (S – E) – premium paid. If S ≤ E, the option would not be exercised and the loss would be equal to the premium paid. Adding the details of the market price after three months would allow for an accurate calculation. However, without this critical piece of information, it's not possible to provide the exact value of the call option or the profit or loss from the transaction.