You are given the following information concerning options on a particular stock: Stock price = $62 Exercise
Question:
Stock price = $62
Exercise price = $65
Risk-free rate = 6% per year, compounded continuously
Maturity = 6 months
Standard deviation = 47% per year
a. What is the intrinsic value of the call option? Of the put option?
b. What is the time value of the call option? Of the put option?
c. Does the call or the put have the larger time value component? Would you expect this to be true in general?
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Related Book For 
Corporate Finance Core Principles and Applications
ISBN: 978-0077905200
3rd edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
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