Find out the intrinsic value of the option, Accounting Basics

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Find out the intrinsic value of the option

Problem:

The following information refers to a six-month call option on the stock of XYZ, Inc. Price of the underlying stock: $50 Strike price of the three-month call: $45 Market price of the option: $10

Requirement:

Question 1: What is the intrinsic value of the option?

Question 2: What is the option's time premium at this price?

Note: Please show guided help with steps and answer.

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Accounting Basics: Find out the intrinsic value of the option

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Accounting Basics: Find out the intrinsic value of the option

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