The premium on a long term call option on the market index with an exercise price of 950 is $12.00 when originally purchased.After 6 months the position is closed,and the index spot price is 965.If interest rates are 0.5% per month,what is the Call Payoff?
A) $2.64
B) $12.00
C) $12.36
D) $15.00

Question

Quizplus · Accepted Answer

The call payoff is calculated as the difference between the spot price and the exercise price, which is 965 - 950 = $15.00.

The Premium on a Long Term Call Option on the Market