What is the time premium

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Calculate the call option value at the end of one period of a European call option with the following terms:
The current price of the underlying asset= $80
The strike price= $75
The one period, risk free rate= 10%
The price of the asset can go up or down 10% at the end of one period
Answer these questions:
What is the fundamental or intrinsic value?
What is the time premium

Reference no: EM13539005

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