Valuation ndash options the following information refers to


Valuation – options

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

a) What is the intrinsic value of the option?

b) What is the option’s time premium at this price?

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Financial Management: Valuation ndash options the following information refers to
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