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Intrinsic value

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Reference no: EM1339556

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?

Reference no: EM1339556

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