When a Call Option Is Out of the Money, Its

question 42

True/False

When a call option is out of the money, its intrinsic value is zero but its time premium may be positive.

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Definitions:

Par Value

The face or nominal value of a bond, stock share, or coupon, as declared by the issuer.

Common Stock

A type of equity security that represents ownership in a corporation, with holders typically having voting rights and dividend eligibility.

Paid-in Capital

Funds received by a company from selling its stock directly to investors, not including any stock sales on the open market.

Common Stock

A type of security that represents ownership in a corporation, entitling the holder to vote at shareholders' meetings and receive dividends.