What Is the Call Option Premium Given the Following Information

question 49

Multiple Choice

What is the call option premium given the following information?

• A) $3.63
• B) $4.28
• C) $5.39
• D) $5.71
• E) $6.66

Understand the distinction between intrinsic value and market price of call options.

Know the impact of time to expiration on the value of call options.

Understand the impact of volatility on the value of call options.

Recognize the effect of the risk-free rate of return on call option value.

---

Definitions:

Debit Column

The Debit Column is the left-hand side of an account record in double-entry bookkeeping, used to record increases in asset, expense, and loss accounts, and decreases in liability, equity, and revenue accounts.

General Journal

A primary accounting record used to document all financial transactions in chronological order.

Services Provided

Activities performed by a company or individual for the benefit or use of another party, typically in exchange for compensation.

Debit

An entry on the left side of an account ledger, indicating an increase in assets or expenses, or a decrease in liabilities, equity, or revenue.