Black-scholes option pricing model, Finance Basics

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Black-scholes option pricing model

Problem:

Lissa Co.'s stock price is currently $30.25. A 6-month call option on Lissa's stock has a strike price of $25 and has an expected volatility of 40% (i.e., expected standard deviation = 40%). The risk-free rate is 6%.

Required:

Question: According to the Black-Scholes option pricing model, what is the value of the option?

Note: Please show how to work it out.

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Finance Basics: Black-scholes option pricing model

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