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A call option on Bedrock Boulders stock has a market price

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A call option on Bedrock Boulders stock has a market price of $7. The stock sells for $30 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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Solution Summary

This post answers conceptual questions on the call options.

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