A 4-Month Call Has a Strike Price of $20

question 75

Multiple Choice

A 4-month call has a strike price of $20.The current underlying stock price is $21.45.What is the intrinsic value of this call?

• A) $0.00
• B) $0.48
• C) $1.45
• D) $3.90
• E) $4.35

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Definitions:

Correlational

Pertaining to a statistical relationship between two or more variables, indicating how one may predict or relate to another.

Causal

Relating to or acting as a cause for something, indicating a relationship where one event or action leads to the occurrence of another.

Experimental

Relating to a method of inquiry in sciences that involves controlled testing of hypotheses to establish cause-and-effect relationships.

Observational

Relating to the method of gaining knowledge by watching and analyzing without direct involvement or interference.