(A) –$10
(B) $0
(C) $1
(D) $10
The answer is: (B) $0
Here, price at expiration = ST = 100
Exercise price = K = 90
Call Option = max(ST-K,0) = max(100-90,0) = max(10,0)
So, between 10 and 0, the maximum value is 10.
(A) –$10
(B) $0
(C) $1
(D) $10
The answer is: (B) $0
Here, price at expiration = ST = 100
Exercise price = K = 90
Call Option = max(ST-K,0) = max(100-90,0) = max(10,0)
So, between 10 and 0, the maximum value is 10.