Response to the following questions:
1. The exercise price on one of Flanagan Company's options is $15, its exercise value is $22, and its time value is $5. What are the option's market value and the price of the stock?
2. Use the Black-Scholes model to find the price for a call option with the following inputs: (1) current stock price is $30, (2) exercise price is $35, (3) time to expiration is 4 months, (4) annualized risk-free rate is 5%, and (5) variance of stock return is 0.25.