Multiple Choice
Sam is considering purchasing a call option on ABC stock. The call has a premium of $3, an exercise price of $50, and ABC is trading at $51 per share. Which of the following statements about the call option is correct?
A) The call has an intrinsic value of $1 and a time value of $2.
B) The call has an intrinsic value of $0 and a time value of $3.
C) The call has an intrinsic value of $3 and a time value of $2.
D) The call has an intrinsic value of $0 and a time value of $1.
Correct Answer:
Verified
Correct Answer:
Verified
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