If the Share Price Is $21

question 96

Multiple Choice

If the share price is $21.50 and the exercise price and premium of a call option written on that share are $19.90 and $2.00, respectively, what is the time value of the option?

• A)$1.60
• B)$0.00
• C)$2.00
• D)$0.40
• E)Not enough information.

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Definitions:

Insurance Settlement

A payment made by an insurance company to a claimant, insured, or beneficiary under the terms of an insurance policy following a loss.

Adjusted Gross Income

is an individual's total gross income minus specific deductions, used to determine tax liability.

Schedule A

A form used for itemizing deductions on a U.S. individual income tax return, including taxes paid, interest, gifts to charity, and other deductible expenses.

Property Tax

A rephrased definition: A levy on property that the owner is required to pay, usually collected by local governments, based on the property's value.