A stock is currently selling for $70 per share and its call option has a $90 exercise price.What is the lower limit on the value of the call option?
A)($20)
B)0
C)$10
D)$20 Lower limit on value of call option = max [0,(stock price - exercise price)]
= max [0,(70 - 90)]

Question

Quizplus · Accepted Answer

The lower limit on the value of a call option is 0, which means that the option is worthless if the stock price is below the exercise price. In this case, the stock price is $70 and the exercise price is $90, so the call option is worthless.

A Stock Is Currently Selling for $70 Per Share and Its