Given a Current Share Price of $20 and an Exercise

question 34

Multiple Choice

Given a current share price of $20 and an exercise price of $22, which of the following statements is true?

• A)A call option has an intrinsic value of $2 and a put option has an intrinsic value of $0.
• B)A call option has an intrinsic value of -$2 and a put option has an intrinsic value of $2.
• C)A call option has an intrinsic value of $0 and a put option has an intrinsic value of $2.
• D)A call option has an intrinsic value of $0 and a put option has an intrinsic value of -$2.
• E)A call option has an intrinsic value of $2 and a put option has an intrinsic value of $2.

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Definitions:

Ultimate Attribution Error

The systematic error made when evaluating the behavior of a group member, attributing positive behaviors to situational factors and negative behaviors to inherent characteristics.

Ingroup Bias

The tendency to favor and extend loyalty to members of one's own group over those from different groups.

Outgroup Derogation

A psychological phenomenon where people tend to view and judge members of a group to which they do not belong less favorably than their own group (ingroup).

Self-Serving Attributions

A cognitive bias where individuals attribute their successes to internal or personal factors while attributing failures to external or situational factors.