Consider the Following Equation: C = S - K

question 41

Multiple Choice

Consider the following equation: C = S - K + dis(K) + P - PV(Div)
In this equation,dis(K) + P - PV(Div) tells us:

• A)the market value of the option.
• B)the difference in the price of an American option over a European option because of dividend capture.
• C)the intrinsic value of the option.
• D)the time value of the option.

---

Definitions:

Finished Goods

Goods that are finished with production and available for purchase.

Accounts Receivable

The money owed to a company by its customers for products or services that have been delivered but not yet paid for.

Work in Process

Goods in various stages of completion throughout the production process, not yet ready for sale.

Finished Goods

Items that are finished with production and available for purchase by consumers.