Use the Following Information for Questions 20-23

question 39

Multiple Choice

Use the following information for questions 20-23.
On April 1, 2020, Gamma Corp. purchases a call option for $ 500, which gives Gamma the right to buy 1,000 shares of Delta Inc. for $ 30 each until December 1, 2020. Delta Inc. shares are currently trading for $ 30. At June 30, 2020, the options are trading at $ 4,800 and the shares at $ 32 each. At December 1, 2020, the options expire with no value.
-The time value of the option at April 1, 2020 is

• A) $ 0.
• B) $ 500.
• C) $ 4,800.
• D) $ 30,000.

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Definitions:

Deep Discounts

Significant reductions in price offered to consumers, often to clear inventory or boost sales temporarily.

Monopolist

A single supplier in a market who has exclusive control over a product or service, often resulting in limited competition.

Comcast

An American telecommunications conglomerate that is one of the world's largest broadcasting and cable television companies.

Time Warner

A former multinational media and entertainment conglomerate headquartered in New York, which was acquired by AT&T in 2018.