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

Question

Quizplus · Accepted Answer

K represents the strike price of the option, which is the price at which the holder of the option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Consider the Following Equation: C = P + S -