The Intrinsic Value of an In-The-Money Put Option Is Equal

question 50

Multiple Choice

The intrinsic value of an in-the-money put option is equal to

• A) the stock price minus the exercise price.
• B) the put premium.
• C) zero.
• D) the exercise price minus the stock price.
• E) none of these.

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Definitions:

ROE

Return on Equity, a measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Repurchase Shares

The act of a company buying back its own shares from the marketplace, reducing the amount of outstanding stock.

Debt-Equity Ratio

A ratio showcasing the relative utilization of debt and equity in the financial structuring of a company’s assets.

Required Return

The minimum expected return by an investor for investing in a particular security or project, considering the risk associated with the investment.