The exercise value is the positive difference between the current price of the stock and the strike price.The exercise value is zero if the stock's price is below the strike price.

Question

Quizplus · Accepted Answer

This is true because if the stock's price is below the strike price, then there is no benefit to exercising the option, as the investor could simply buy the stock at its current market price instead of paying the higher strike price. Therefore, the exercise value can only be positive if the stock's price is above the strike price.

The Exercise Value Is the Positive Difference Between the Current