# value of volatility

You calculate the black schoals value of a call option as $3.50 for a stock that doesnâ??t pay dividends but the actual price is $3.75 . The most likely explanation is that either the option is_________or the volatility you input into the model is too_________

a. Overvalued and should be written; low

b. Undervalued and should be written; low

c. Overvalued and should be purchased; high

d. Undervalued and should be purchased; high

e. None

https://brainmass.com/economics/finance/value-volatility-354550

#### Solution Preview

e. None.

The value of call is $3.50 against the actual price of $3.75 which means that ...

#### Solution Summary

This solution exemplifies the value of volatility.

$2.19