What Is the Intrinsic Value of the August 25 Call

question 28

Multiple Choice

What is the intrinsic value of the August 25 call?
KNJ (KNJ) Underlying share price: 30.86
$\begin{array}{|l|l|l|l|}\hline && Call & Put \\\hline Expiration&Strike&Last&Last\\\hline \text { Aug } & 25 & 6.15 & .05\\\hline \text { Nov } & 25 & 6.60 & .10 \\\hline \text { Aug } & 35 & .10 & 4.60 \\\hline \text { Nov } & 35 & .70 & 5.10\\\hline\end{array}$

• A)€0.10
• B)€5.86
• C)€6.15
• D)€10.00
• E)€25.00

---

Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, assessing the attractiveness of an investment.

Salvage Value

is the estimated resale value of an asset at the end of its useful life, important for depreciation calculations.

Outflow

The movement of money out of a business or financial account, often associated with expenses or investments.

Payback Period

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.