The present value of the strike price can be defined as:
A) Price that represents the highest probability of the future value of the stock price.
B) A T-bill with a face value equal to the strike price.
C) The price that reflects the volatility of the underlying stock.
D) The present value of a risky security discounted at the market rate of return.
E) The current market value of the underlying security.

Question

Quizplus · Accepted Answer

The present value of the strike price can be thought of as a T-bill with a face value equal to the strike price, as it represents a risk-free, future cash amount discounted back to its present value.

The Present Value of the Strike Price Can Be Defined