Before Expiration,the Time Value of an at the Money Call

question 16

Multiple Choice

Before expiration,the time value of an at the money call option is always

• A)positive.
• B)equal to zero.
• C)negative.
• D)equal to the stock price minus the exercise price.
• E)none of the above.

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Definitions:

Derivative Securities

Financial instruments whose value is derived from the value of other, underlying assets.

Nikkei Stock Index

A stock market index for the Tokyo Stock Exchange, representing the performance of 225 top-rated companies listed in Japan.

FTSE Indexes

FTSE Indexes are a series of stock market indices developed by the Financial Times Stock Exchange Group, which include benchmarks for UK and global equities markets.

Exchange Rate

The price of one country's currency in terms of another country's currency.