The Premium on a Long Term Call Option on the Market

question 5

Multiple Choice

The premium on a long term call option on the market index with an exercise price of 950 is $12.00 when originally purchased.After 6 months the position is closed,and the index spot price is 965.If interest rates are 0.5% per month,what is the Call Payoff?

• A) $2.64
• B) $12.00
• C) $12.36
• D) $15.00

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