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QUESTION 15 Which one of the following describes the intrinsic value of a call option? the stock price or the strike price, whichever is smaller the stock price minus the strike price or zero, whichever is greater the market price of the underlying security zero, if the call is in-the-money negative amount, if the call is out-of-the-money
QUESTION 15 Which one of the following describes the intrinsic value of a call option? the stock price or the strike price, whichever is smaller the stock price minus the strike price or zero, whichever is greater the market price of the underlying security zero, if the call is in-the-money negative amount, if the call is out-of-the-money.
Expert Solution
b. the stock price minus the strike price or zero, whichever is greater.
working;
A call option is one which gives a right, but not an obligation to its holder to purchase the underlying stock at strike price.
The intrinsic value of a call option will be the difference between stock price and strike price, if the stock price is higher than stock price.
The intrinsic value of the call option will be zero, if stock price is lower than strike price.
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