A call option on Rosenstein Corporation stock has a market price of $7. Thestock sells for $31 a share, and the option has an exercise price of $25 a share.a. What is the exercise value of the call option?b. What is the premium on the option?

Intermediate Financial Management (MindTap Course List)
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Author:Eugene F. Brigham, Phillip R. Daves
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Chapter5: Financial Options
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A call option on Rosenstein Corporation stock has a market price of $7. The
stock sells for $31 a share, and the option has an exercise price of $25 a share.
a. What is the exercise value of the call option?
b. What is the premium on the option?

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