IBM shares are currently selling at $75. The premium on a call option on IBM shares with an exercise price of $60 will be:
A) less than $15.
B) greater than $15.
C) equal to $15.
D)zero.

Name: IBM shares are currently selling at $75. The premium on a call option on IBM shares with an exercise price of $60 will be: A) less than $15. B) greater than $15. C) equal to $15. D)zero.
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Question

Quizplus · Accepted Answer

Intrinsic value = $75 - 60 = $15; Thus the premium must exceed $15 since there is time remaining prior to expiration.

IBM Shares Are Currently Selling at $75