A Call Option with Several Months Until Expiration Has a Strike

question 12

Multiple Choice

A call option with several months until expiration has a strike price of $55 when the stock price is $50. The option has ________ intrinsic value and ________ time value.

• A) negative; positive
• B) positive; negative
• C) zero; zero
• D) zero; positive

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Definitions:

Experimental Research

A systematic and scientific approach to research in which the researcher manipulates one or more variables to observe the effect on some behavior or mental process.

Survey

A method of gathering information from a sample of individuals through questions to generalize findings to a larger population.

Experimentation

A method of scientific investigation involving the manipulation and controlled testing of variables to establish cause and effect relationships.

Correlational Research

A research method that examines the relationship between two or more variables to determine if a correlation exists.