The price of a stock is $40, and a six-month call with a strike price of $38 sells for $8. Round your answers to the nearest dollar.

1. What is the option's intrinsic value?

   $

2. What is the option's time premium?

   $

3. If the price of the stock rises, what happens to the price of the call?

   As the price of the stock rises, the value of the call .

4. If the price of the stock falls to $39, what is the maximum you could lose from buying the call? Enter your answer as a positive value.

   $

5. What is the maximum profit you could earn by selling the call uncovered (naked)?

   $

6. If, at the expiration of the call, the price of the stock is $38, what is the profit (or loss) from buying the call? Enter your answer as a positive value.

   The from buying the call is $ .

7. If, at the expiration of the call, the price of the stock is $38, what is the profit (or loss) from selling the call naked? Enter your answer as a positive value.

   The from selling the call naked is $ .

8. If, at the expiration of the call, the price of the stock is $47, what is the profit (or loss) from buying the call? Enter your answer as a positive value.

   The from buying the call is $ .

9. If, at the expiration of the call, the price of the stock is $47, what is the profit (or loss) from selling the call naked? Enter your answer as a positive value.

   The from selling the call naked is $ .