How much is your call worth and call option

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Reference no: EM131548017

You own a one-year call option to buy one acre of Los Angeles real estate. The exercise price is $2.19 million, and the current, appraised market value of the land is $1.89 million. The land is currently used as a parking lot, generating just enough money to cover real estate taxes. The annual standard deviation is 16% and the interest rate 10%. How much is your call? worth? Use the Black–Scholes formula.

Reference no: EM131548017

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