At What Point Does the Value of a Call Option

question 52

Multiple Choice

At what point does the value of a call option lie furthest above its lower bound (that is,the maximum of zero or the stock price − exercise price) ?

• A) When the stock price is zero.
• B) When the stock price is very high relative to the exercise price.
• C) When the stock price equals the exercise price.
• D) It depends on the maturity of the option.