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The Fair Market Value of a Near-Month Call Option with a Strike

question 7

Multiple Choice

The fair market value of a near-month call option with a strike price of $45 is $5,when the stock is trading at $48.
-Based on the preceding information,which of the following is true of the intrinsic and time values associated with this option.


Definitions:

Confidence Interval

A range of values derived from sample statistics that is likely to contain the true parameter of the population with a specified level of confidence.

Population Mean

The average of all the numerical values in a population, calculated as the total sum of the values divided by the number of values in the population.

Population Standard Deviation

A measure of the dispersion of all values in a given population from the mean of that population.

Sampling Error

The discrepancy between a sample statistic and the true population parameter, which arises purely by chance.

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