For a Put Option, the Kink in the Intrinsic Value

question 43

Multiple Choice

For a put option, the kink in the intrinsic value curve occurs at the

• A) premium price.
• B) exercise price.
• C) value of $0.
• D) value of strike price - market price.

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Definitions:

Authorized Shares

The maximum number of shares that a corporation is legally allowed to issue, as specified in its charter.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and entitles the shareholder to vote on corporate matters.

Stockholders' Equity

Signifies the stake of shareholders in a corporation, determined by subtracting total liabilities from total assets.

Preference Rights

A set of privileges or priorities given to shareholders, such as the right to purchase new shares before the general public.