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Basic Question 2 of 11
Suppose a stock exists with a price of $42, and a call option on the stock exists with an exercise price of $36. What is the approximate minimum value of the call option?
B. $0
C. $6
A. $36
B. $0
C. $6
User Contributed Comments 4
| User | Comment |
|---|---|
| aakash1108 | ....actually a little bit more than $6.00 if it is before the expiration day.....X will be discounted at RFR, and thus S-X will be a li'l bit higher than $6.00 |
| endeca | minimum value is $6. That's what the question asks. |
| jonan203 | this question is asking about intrinsic value, aakash in refering to extrinsic value (time value) which is NOT a part of this question... |
| khalifa92 | cT=Max(0,ST-X) thus max = 6, Minimum = 0 |
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Colin Sampaleanu
Learning Outcome Statements
explain the exercise value, moneyness, and time value of an option
CFA® 2025 Level I Curriculum, Volume 5, Module 8.