For Stock ABC the December next year Forward is $450. A call option on ABC, has a Strike of $420 and costs (premium) $50. What is the intrinsic and extrinsic value? A. Intrinsic $30, Extrinsic $30 B. Intrinsic $40, Extrinsic $10 C. Intrinsic $0, Extrinsic $30 D. Intrinsic $30, Extrinsic $20

For Stock ABC the December next year Forward is $450. A call option on ABC, has a Strike of $420 and costs (premium) $50. What is the intrinsic and extrinsic value? A. Intrinsic $30, Extrinsic $30 B. Intrinsic $40, Extrinsic $10 C. Intrinsic $0, Extrinsic $30 D. Intrinsic $30, Extrinsic $20

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter2: Fundamental Economic Concepts

Section: Chapter Questions

Problem 6E

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Question

For Stock ABC the December next year

Forward is $450. A call option on ABC, has a

Strike of $420 and costs (premium) $50.

What is the intrinsic and extrinsic value?

A.

Intrinsic $30, Extrinsic $30

B.

Intrinsic $40, Extrinsic $10

C.

Intrinsic $0, Extrinsic $30

D.

Intrinsic $30, Extrinsic $20

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