A particular call is the option to buy stock at $40. It expires in six months and currently sells for $4 when the price of the stock is $41.

What is the intrinsic value of the call? Round your answer to the nearest dollar. $ What is the time premium paid for the call? Round your answer to the nearest dollar. $

What will the value of this call be after six months if the price of the stock is $35, $40, $45, $55? Round your answer to the nearest dollar.

Price of the stock

Value of the call at expiration

$35

$

40

45

55

If the price of the stock rises to $55 at the expiration date of the call, what is the percentage increase in the value of the call? Round your answer to one decimal places. % Does this example illustrate favorable leverage? -Select-YesNoItem 8

If an individual buys the stock and sells this call, what is the cash outflow (i.e., net cost)? Round your answer to the nearest dollar. $ What will the profit on the position be after six months if the price of the stock is $25, $30, $35, $40, $41, $45, $55? Round your answer to the nearest dollar.

Price of the stock		Profit on the Position
$25		$
30
35
40
41
45
55

If an individual sells this call naked, what will the profit or loss be on the position after six months if the price of the stock is $40, $41, $55? Round your answer to the nearest dollar.

Price of the stock		Profit on the sale of the call
$40		$
41
55