The reason why the call options having exercise prices more than the price of the underlying stock generally sells for positive prices Introduction: Derivative assets are securities whose payoff depends on the other securities' prices. A call option allows to buy the asset at a certain price before or on the expiration date or the maturity date which is specified. The specific price is referred to as the exercise price or the strike price.

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Chapter 2, Problem 19PS

Summary Introduction

To determine:

The reason why the call options having exercise prices more than the price of the underlying stock generally sells for positive prices

Introduction:

Derivative assets are securities whose payoff depends on the other securities' prices. A call option allows to buy the asset at a certain price before or on the expiration date or the maturity date which is specified. The specific price is referred to as the exercise price or the strike price.

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