When the Stock Price Has Risen Above the Exercise Price

question 117

Multiple Choice

When the stock price has risen above the exercise price, the value of a call option is equal to the stock price:

• A)Less the value of the dividend
• B)Less the value of the option
• C)Less the present value of the exercise price
• D)Less the exercise price

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Definitions:

Book Income

The income of a business reported in its financial statements, different from taxable income reported to the IRS.

Taxable Income

The amount of income used to determine how much tax an individual or a corporation owes to the government, after all deductions and exemptions have been accounted for.

Tax-Exempt

A status that exempts individuals or organizations from having to pay certain taxes.

Tax Liability

The total amount of tax owed to the government by an individual, corporation, or other entity within a given tax period.