Suppose it is January 1990 and the current spot rate for the DM is $0.5925.The call premium on a call option with an exercise price of $0.5675 is $0.0373.What is the intrinsic value of one DM 62,500 call option?
A)$2,331.25
B)$1,562.50
C)$950.00
D)$768.75

Question

Quizplus · Accepted Answer

The intrinsic value of a call option is calculated as the difference between the spot rate and the exercise price, multiplied by the contract size. Here, it is ($0.5925 - $0.5675) * 62,500 = $1,562.50.

Suppose It Is January 1990 and the Current Spot Rate