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:

Damage

Physical harm that impairs the value, usefulness, or normal function of something, often requiring repair or compensation.

Nonconforming Goods

Products that are delivered to a buyer that do not meet the specifications or requirements as stated in the purchase contract.

Deficiency

In legal and financial terms, deficiency refers to the shortfall between the owed debt and the proceeds from a sale of collateral or asset used to repay it.

Cure

The process of resolving a breach of contract in a manner that satisfies the aggrieved party or terms of agreement.