The Value of a Call Option Just Prior to Expiration

question 75

Multiple Choice

The value of a call option just prior to expiration is (where V is the underlying asset's market price and X is the option's exercise price)

• A)Max [0, V - X]
• B)Max [0, X F- V]
• C)Min [0, V - X]
• D)Min [0, X - V]
• E)Max [0, V > X]

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Definitions:

Credit Side

The right side of an accounting ledger where increases in liabilities, equity, and revenue, or the decrease in assets, are recorded.

T Account

A visual representation of a ledger account that displays both the debit and credit sides to track the balance of financial transactions.

Chronological Order

Organizing events or actions by the order in which they occurred in time.

Error Location

The process or act of identifying the specific spot within a data set, document, or system where a mistake or discrepancy has occurred.