What Is the Intrinsic Value of the August 25 Call

question 87

Multiple Choice

What is the intrinsic value of the August 25 call? $$\begin{array}{l}\text { KNJ (KNJ) Underlying stock price: } 30.86\\\begin{array} { c c c r } \text { Expiration } & \text { Strike } &\underline{\text { Call }} & \underline{\text { Put }} \\\text { Aug } & 25 & 6.15 & \text { Last } \\\text { Nov } & 25 & 6.60 & .05 \\\text { Aug } & 35 & .10 & 4.60 \\\text { Nov } & 35 & .70 & 5.10\end{array}\end{array}$$

• A)$0.10
• B)$5.86
• C)$6.15
• D)$10.00
• E)$25.00

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Definitions:

Impairment Losses

Impairment losses are accounted for when the carrying value of an asset exceeds its recoverable amount, indicating that the asset is not expected to generate sufficient future economic benefits.

Reversals

Accounting actions undoing previous recognitions, such as reversing an expense or revenue recorded in earlier accounting periods.

Other Comprehensive Income

Income that is not included in net income and includes items that are not realized or not a result of daily operations, such as foreign currency translation adjustments.

Revaluation Method

An accounting technique that involves adjusting the book value of an asset to reflect its current fair market value.