The Intrinsic Value of an Out-Of-The-Money Call Option Is Equal

question 66

Multiple Choice

The intrinsic value of an out-of-the-money call option is equal to

• A)the call premium.
• B)zero.
• C)the stock price minus the exercise price.
• D)the striking price.
• E)none of the above.

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Definitions:

Short-Term Losses

Financial losses realized on the sale or exchange of an asset held for one year or less.

Making a Decision

The cognitive process of selecting a course of action from among multiple alternatives.

Less Than Optimal

A situation or outcome that does not achieve the best possible or most desired performance level.

Disposition Effect

A phenomenon in behavioral finance where investors are more likely to sell assets that have increased in value, rather than those that have decreased.