Brigham, E. F., & Ehrhardt, M. C. (2017). Financial management: theory and practice. Australia: South-Western.

Chapter 8 Mini Case P. 370

c. Consider Triple Plays call option with a $25 strike price. The following table contains historical values for this option at different stock prices: Stock Price $25, 30, 35, 40, 45, 50

Call Option Price $3.00, 7.50,12.00, 16.50, 21.00, 25.50

(1) Create table that shows (a) stock price, (b) strike price, (c) exercise value, (d) option price, and ( e) the time value, which is the options price less its exercise value. (2) What happens to the time value as the stock price rises? Why?