A Call Option Whose Exercise Price Is Less Than the Spot

question 55

Multiple Choice

A call option whose exercise price is less than the spot rate is said to be

• A) in-the-money.
• B) at-the-money.
• C) out-of-the-money.
• D) under-the-spot.

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Definitions:

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash payments or additional shares.

Net Income

The total earnings or profit of a company after accounting for all expenses and taxes; represents the company's bottom line.

Year-End Equity

refers to the total value of an owner's interest in a company at the end of a financial year, calculated as assets minus liabilities.

Total Assets

The sum of all resources owned by a company, valued in terms of monetary units, which includes both current and non-current assets.