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:

Trade Discount

A reduction from the list or retail price of a product, given by sellers to buyers in the business-to-business market.

Jeweller

A specialized professional or establishment in the business of selling, crafting, and repairing jewelry.

Canadian Polar Bear Diamonds

High-quality diamonds sourced from specific mines in Canada, known for their ethical sourcing and purity.

Trade Discount

A reduction from the listed price of goods or services offered to buyers in the business-to-business market to encourage purchase in larger quantities.