Problem 25-11 Time Value of Options [LO2]

You are given the following information concerning options on a particular stock:

Stock price	=	$74
Exercise price	=	$70
Risk-free rate	=	7% per year, compounded continuously
Maturity	=	6 months
Standard deviation	=	32% per year

a.	What is the intrinsic value of each option? (Leave no cells blank - be certain to enter "0" wherever required.)

	Value
Call option	$
Put option	$

b.	What is the time value of each option? (Round your answers to 2 decimal places. (e.g., 32.16))

	Value
Call option	$
Put option	$