When the Exercise Price of a Call Option Is Higher

question 41

Multiple Choice

When the exercise price of a call option is higher than the current price of the stock,the option is said to be:

• A)at-the-money.
• B)in-the-money.
• C)out-of-the-money.
• D)trading at par.
• E)trading below par.

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Definitions:

Present Value

The equivalent current value of a future financial sum or stream of cash flows, factoring in a specified rate of return.

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Price

The amount of money or consideration exchanged for the ownership or use of a good or service.

Business

An organization or enterprising entity engaged in commercial, industrial, or professional activities, often structured to produce and sell goods and services for profit.