At the Time of Expiration,the Premium (Price)on a Call Option

question 68

Multiple Choice

At the time of expiration,the premium (price) on a call option

• A)Reflects risk in addition to intrinsic value
• B)Will be equal to the intrinsic value
• C)May be above or below the intrinsic value
• D)None of the above

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Definitions:

Common Stock

An equity instrument indicating ownership in a company, which provides the holder with voting privileges and a share in the company's profits through dividends.

Stockholders' Equity

The portion of a company's capital that is owned by its shareholders, calculated as the company's total assets minus its total liabilities.

Cumulative

Describes something that increases or accumulates over time, often used in the context of investments or financial statements.

Legal Capital

The portion of a company's equity that cannot legally be distributed to shareholders as dividends, often linked to the par value of common and preferred stock.