The Value of an Option If It Were to Immediately

question 341

Multiple Choice

The value of an option if it were to immediately expire, that is, its lower pricing bound, is called an option's _________________.

• A) Strike value.
• B) Market value.
• C) Volatility value.
• D) Time value.
• E) Intrinsic value.

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Definitions:

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company for reinvestment.

Year-end Balance Sheet

A financial statement that lists a company's assets, liabilities, and equity at the end of its fiscal year.

Lower of Cost or Market

An accounting principle that states inventory should be recorded at the lower of its historical cost or its current market value.

Inventory Item

Goods or merchandise kept on the premises of a business or warehouse and available for sale or distribution.