The Difference Between the Strike Price of an Option and Spot

question 19

Multiple Choice

The difference between the strike price of an option and spot price of the item being hedge at any one time represents the option's:

• A)​time value.
• B)​intrinsic value.
• C)​fair value.
• D)​premium.

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Definitions:

Profitability

The ability of a company to generate earnings relative to its revenue, assets, or equity over a specific period, indicating its financial health.

Vertical Analysis

A financial method that expresses each item within a financial statement in percentage terms of a base figure for the same time period, facilitating comparison.

Base Amount

A reference value or starting point used in financial calculations or comparisons.

Vertical Analysis

A financial analysis method that lists each line item as a percentage of a base figure within the same financial statement.