Asked by Brennan Stevens on May 05, 2024
Verified
An American-style call option with six months to maturity has a strike price of $35. The underlying stock now sells for $44. The call premium is $14. What is the intrinsic value of the call?
A) $14
B) $9
C) $0
D) $23
Intrinsic Value
The inherent worth of a financial asset, determined through fundamental analysis without reference to its market value.
Strike Price
The specified price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.
Call Premium
The additional amount above the bond's face value that must be paid to redeem it before its maturity date.
- Recognize and figure out the essential and time-related components of options.
Verified Answer
Learning Objectives
- Recognize and figure out the essential and time-related components of options.
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