7. Use the worksheet provided in the spreadsheet file to compute intrinsic value and time value for each of the options. Do those values look sensible?

-2- UV4652 Exhibit 1 ITO'S DELIGHT Option Premium and Market Data for Microsoft as of March 5, 2003 Stock Price Strike Price Calls April Puts April March July March July 0.35 23.07 23.07 23.07 23.07 23.07 20.00 21.25 22.50 23.75 25.00 3.20 2.00 1.15 0.55 0.20 3.50 2.60 1.70 1.05 0.60 4.20 3.40 2.70 2.05 1.50 0.10 0.20 0.55 1.15 2.10 0.60 1.00 1.75 2.50 1.00 1.40 1.90 2.50 3.10 Expiration date* Days to expiration 21-Mar 16 25-Apr 51 21-Jul 138 21-Mar 16 25-Apr 51 21-Jul 138 Intrinisic value: 23.07 23.07 23.07 23.07 23.07 20.00 21.25 22.50 23.75 25.00 Time value: 23.07 23.07 23.07 23.07 23.07 20.00 21.25 22.50 23.75 25.00 * Expires 3rd Friday in month