Suppose you own a call option on a stock for which the following applies: Underlying stock's price = $60 Exercise price on the option = $58 Annual risk-free rate = 5 percent Time to expiration on the option = 3 months Standard deviation of the underlying stock's return = .12 Calculate the value of the option.

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.