A 45 Call Option on a Share Priced at $50

question 26

Multiple Choice

A 45 call option on a share priced at $50 is priced at $6.50. This call has an intrinsic value of ________ and a time value of ________.

• A)$6.50; $0
• B)$5.00; $1.50
• C)$1.50; $5.00
• D)$0; $6.50

---

Definitions:

Material Terms

The essential details and provisions of a contract that affect the rights and obligations of the parties involved.

Definite

clearly stated or decided; not vague or doubtful.

Requisite Manner

The required or specified way something must be done, often detailed in a legal context or formal procedure.

Restatement (Second)

A series of legal treatises that summarize the common law in several areas, serving as authoritative guides but not binding law.