When a Call Option Is Out of the Money, Its

question 42

True/False

When a call option is out of the money, its intrinsic value is zero but its time premium may be positive.

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Definitions:

Fixed Costs

Fixed costs are business expenses that remain constant regardless of changes in production level or sales volume, such as rent, salaries, or insurance.

Budgeting

The process of creating a plan to spend money, outlining an organization's financial and operational goals.

Flexible Budget

A budget that molds itself to fit changes in the volume or intensity of activity.

Other Expenses

Costs not directly related to the production or selling of goods and services, such as interest expenses and loss from foreign exchange.