On March 17th Randy Johnson purchased a call option contract to buy 1,000 shares of Cincinnati Bagels at a strike price of $32. Randy paid $4.50 for each option. On that date the shares were trading for $33.50 per share. Required: 1 Calculate the intrinsic value and speculative premium on each option on March 17h (2 marks) 2 On May 20 shares of Cincinnati Bagels were trading for $37 per share. Assuming the speculative premium (time value) was $1.25, what is the price of each option? (1 marks) 3. if, on October 17th, when the shares of Cincinnati Bagel were trading for 545 cach, Randy exercises all of his options and then immediately sells the shares, what is his total gain, or loss, on the investment? (3 marks) Describe why options have an initial premium/cost (2 marks)