An American-Style Call Option with Six Months to Maturity Has

question 11

Multiple Choice

An American-style call option with six months to maturity has a strike price of $35.The underlying stock now sells for $43.The call premium is $12.What is the time value of the call?

• A) $8
• B) $12
• C) $0
• D) $4
• E) cannot be determined without more information.

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Definitions:

Constitution

A fundamental set of principles and precedents upon which a state or other organization is governed, often codified as a written document.

Commonly Agreed-upon

A term describing something that has been collectively accepted or approved by a majority.

Letters from an American Farmer

A series of essays written by J. Hector St. John de Crévecoeur in the late 18th century, depicting life in the American colonies and the emerging American identity.