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

Question

Quizplus · Accepted Answer

C represents the value of the call option in the given equation. This equation is a simplified representation of an option pricing model, where P is the current stock price, S is the strike price, PV(K) is the present value of the strike price, and PV(Div) is the present value of dividends.

Consider the Following Equation: C = P + S -