Assume That a Call Option Has an Exercise Price of $1.50/£

question 56

Multiple Choice

Assume that a call option has an exercise price of $1.50/£. At a spot price of $1.45/£, the call option has:

• A) a time value of $0.04.
• B) a time value of $0.00.
• C) an intrinsic value of $0.00.
• D) an intrinsic value of -$0.04.

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Definitions:

Monitoring

The systematic process of observing, recording, and analyzing activities or performance to ensure objectives are being met.

Independent Sources

Refers to information or data that comes from parties with no vested interest in the outcome of a decision, ensuring objectivity.

Problem Solving

The process of identifying issues and determining effective solutions to overcome or manage them.

Easy Problems

Issues or challenges that can be resolved with minimal effort, often due to clear solutions or low complexity.