Which of the following statements about the value of a call option at expiration is FALSE? A: The short position in the same call option can result in a loss if the stock price exceeds the exercise price. B: The value of the long position equals zero or the stock price minus the exercise price, whichever is higher. C: The value of the long position equals zero or the exercise price minus the stock price, whichever is higher. D: The short position in the same call option has a zero value for all stock prices equal to or less than the exercise price.
Which of the following statements about the value of a call option at expiration is FALSE? A: The short position in the same call option can result in a loss if the stock price exceeds the exercise price. B: The value of the long position equals zero or the stock price minus the exercise price, whichever is higher. C: The value of the long position equals zero or the exercise price minus the stock price, whichever is higher. D: The short position in the same call option has a zero value for all stock prices equal to or less than the exercise price.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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tHE CORRECT OPTION IS C but what is wrong with the last statement?
The short position in the same call option has a zero value for all stock
prices equal to or less than the exercise price. - Please explain how this statement is true? please give a detailed explanation and in simple terms.
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