CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

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?

A. $36
B. $0
C. $6
Correct Answer: C

42 - 36 = 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
You need to log in first to add your comment.