At Contract Maturity the Value of a Call Option Is

question 22

Multiple Choice

At contract maturity the value of a call option is ________, where X equals the option's strike price and ST is the stock price at contract expiration.

• A) max (0, ST − X)
• B) min (0, ST − X)
• C) max (0, X − ST)
• D) min (0, X − ST)

---

Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, typically measured by GDP.

Equally-Weighted Portfolio

An investment portfolio in which each asset is allocated the same proportion of the total investment, regardless of the asset's market value.

Short Sell

The practice of selling a borrowed security with the intention of buying it back later at a lower price to profit from the price difference.

Arbitrage Pricing Theory

A financial model that estimates the return of an asset by considering multiple risk factors and their respective risk premiums, excluding unsystematic risk through diversification.