CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

Consider a stock call option with the following characteristics:

Type of option: call option on stock
Underlying asset: 100 shares of Coca Cola stock
Exercise price: $60 per share
Premium: $1.25 per share
Expiration date: November

Let the current market price of Coca Cola stock be $62.75 per share. In this case, ______
A. the call option is "in the money" with an intrinsic value of $2.75.
B. the call option is "out of the money" with an intrinsic value of $2.75.
C. the call option is "out of the money" with an intrinsic value of zero.
Explanation: CT = MAX(0, ST - X) = MAX(0, 62.75 - 60) = MAX (0. 2.75) = 2.75

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Inaganti6 a passing score on the CFA exams means your future is in the money
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