4a. A call option on the stock of Bedrock Boulders has a market price of $7. The stock sells for $28 a share, and the option has a strike price of $26 a share. What is the exercise value of the call option?

4b. What is the option's time value?

5.The exercise price on one of Flanagan Company's options is $14, its exercise value is $22, and its time value is $7. What are the option's market value and the price of the stock?

Option's market value:

Price of the stock:

6. Black-Scholes Model

Assume that you have been given the following information on Purcell Industries:

Current stock price = $15	Strike price of option = $14
Time to maturity of option = 6 months	Risk-free rate = 8%
Variance of stock return = 0.11
d1 = 0.582008	N(d1) = 0.719719
d2 = 0.347487	N(d2) = 0.635887

According to the Black-Scholes option pricing model, what is the option's value? Round your answer to the nearest cent.