The Value of a Call Option at Expiration Will Be

question 46

Multiple Choice

The value of a call option at expiration will be equal to the maximum of zero or the:

• A) stock price.
• B) exercise price.
• C) stock price minus the exercise price.
• D) exercise price minus the stock price.

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Definitions:

Current Ratio

A financial ratio indicating a firm's capacity to settle its short-term liabilities with assets that can be easily converted into cash within a year.

Total Current Assets

The total value of all assets that a company expects to convert into cash within one year, including cash, inventory, and accounts receivable.

Total Current Liabilities

The sum of all liabilities of a company that are due within one year, including accounts payable, short-term loans, and other short-term financial obligations.

Assets

Resources owned by a person or business that have economic value and can provide future benefits.