Consider the following equation: C = P + S - PV(K)- PV(Div)
In this equation, what does the term S represent?
A)the current share price
B)the exercise price of the option
C)the payoff of a zero-coupon bond
D)the value of the call option

Question

Quizplus · Accepted Answer

S represents the current share price in the given equation. This equation is used in financial models to calculate the value of a call option, where C is the call option value, P is the present value of the exercise price, S is the current share price, PV(K) represents the present value of the strike price, and PV(Div) represents the present value of dividends.

Consider the Following Equation: C = P + S -