Question: answer this question both parts a and b On January 3, Linus Lid. purchases a call option for $200 from Lucy Corp. to buy 1,000

answer this question both parts a and b

On January 3, Linus Lid. purchases a call option for $200 from Lucy Corp. to buy 1,000 Rerun Inc. shares at an exercise price of $42 per share. The option expires May 1. At this time the current market price of Rerun shares is also $42. On March 31 (Linus' year end), the market value of the Rerun shares is $53, and the fair value of the option has increased to $14,000. On April 15, Linus takes delivery of (buys) the Rerun shares as agreed in the option contract. The market value of Rerun's shares is now $54. Instructions (show any calculations) a. Calculate the intrinsic value and the time value of this option at January 3 2 March 31 b. Prepare general journal entries for the following dates: January 3 2. March 31 3. April 15

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