The Fair Market Value of a Near-Month Call Option with a Strike

question 25

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,the call option:

• A)has no intrinsic value currently.
• B)is at the money.
• C)is out of the money.
• D)is in the money.

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Definitions:

Population Distributions

Represents the spread of values, or observations, of a particular variable across an entire population.

Nonparametric Tests

Statistical tests that do not assume a specific distribution for the data, used for analyzing ordinal or nominal data with unknown parameters.

Wilcoxon Rank Sum Test

A nonparametric test used to determine whether there is a significant difference between two independent samples by comparing their rank sums.

Significance Level

The threshold below which a statistical result is considered significant, typically reflecting the probability of wrongly rejecting the null hypothesis.