Question: A 3 month call option is trading with an exercise price of US$50. The current price of the underlying stock is US$60. The risk free

A 3 month call option is trading with an exercise price of US$50. The current price of the underlying stock is US$60. The risk free rate is 7% compounded continuously and the variance of the stock price return is 14.4%.

What is the Intrinsic Value and Based the Black Scholes Model what is the total value of the call option and what accounts for the difference in the total value and the intrinsic value.

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