Which of the Following Statements Is Correct Concerning Call Options

question 39

Multiple Choice

Which of the following statements is correct concerning call options?

• A) Value of a call option at expiration will be greater than the stock price.
• B) Value of a call option at expiration will be equal to the exercise price.
• C) Value of a call option at expiration will be equal to the difference between the stock price and exercise price.
• D) Value of a call option at expiration will be equal to zero.

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Definitions:

Insight

A sudden understanding or realization of a problem's solution, often coming unexpectedly after a period of contemplation or seeming like a spontaneous revelation.

Mental Set

A psychological tendency or mindset to approach problems in a specific way due to past experiences or habits.

Compensatory Model

An approach in decision making that considers alternatives and compensates for less desirable aspects of options by considering the strengths of other aspects.

Functional Mind Set

An attitude or approach that focuses on practical and effective solutions to problems, emphasizing functionality over abstractness.