Question

Which of the following is the intrinsic value of an American call on a stock with...

Which of the following is the intrinsic value of an American call on a stock with
no dividends?
a. Max(0, S0 - X(1 + r)-T)
b. S0
c. Max(0, S0 - X)
d. Max(0, S0 (1 + r)-T - X)
e. 0

0 0
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Answer #1

We know that the intrinsic value of an American call on a stock with
no dividends is given as Max(0, S0 - X)

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