The Value of a Call Option Just Prior to Expiration

question 58

Multiple Choice

The value of a call option just prior to expiration is (where V is the underlying asset's market price and X is the option's exercise price)

• A) max [0, V - X].
• B) max [0, X - V].
• C) min [0, V - X].
• D) min [0, X - V].
• E) max [0, V > X].

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Definitions:

T Score

A standardized score that indicates how many standard deviations an element is from the mean of its distribution.

Z Scores

Standard scores indicating how many standard deviations an element is from the mean.

Combinations

The selection of items from a larger set where order does not matter.

Distribution

The way in which values in a dataset are spread or dispersed across the range of data points.