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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:

Average Price

The mean price of a product or stock over a specific period, calculated by dividing the total cost by the number of units.

Direct Materials Price Variance

The difference between the actual cost and standard cost of materials used in production, highlighting efficiency in procurement.

Expected Total Sales

The forecasted amount of sales a business anticipates to achieve in a specific period, calculated based on market research and historical sales data.

Average Price

The mean cost of goods or services calculated over a specific period or set of units, used to determine general price levels.

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