The intrinsic value of call option is considered as out of the money, if _____________?
Correct answer: C. stock price < exercise price
- A. bond price > treasury price
- B. treasury price exercise price
- C. stock price < exercise price
- D. None of These
Explanation
A call option is out of the money when the stock price is below the exercise price, since exercising would require buying at a price higher than the market price. Its intrinsic value is therefore zero.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
The voting ballot that is sent to stock holders by the corporation is classified as ___________
The total count of all the contracts and options such as call, put and futures outstanding at the start of working day is classified as __________?
The type of trade members who take position for short period of time or sometimes for only few minutes are classified as ___________?
The votes for each stock holder were multiplied to number of elected directors, to calculate ___________?
The type of contract which involves the exchange of assets that will occur in future at the price settled daily, is classified as _____________?
The prices that are adjusted day to day to picture the current conditions of future markets are classified as __________?