Explanation

For a call option at expiration, the value is:

Call Value = Max(0, Stock Price - Strike Price)

Given:

• Call premium paid = $24.70 (this is the cost to buy the option, not relevant for expiration value calculation)
• Strike price = $670
• Call value at expiration = $47.60

We need to find the underlying stock price (S) at expiration:

$47.60 = Max(0, S - $670)

Since the call has positive value ($47.60 > 0), the stock price must be above the strike price:

$47.60 = S - $670 S = $670 + $47.60 = $717.60

Therefore, the price of the underlying at expiration is $717.60.

Key Points:

• The premium paid ($24.70) is irrelevant for calculating the expiration value - it's a sunk cost
• At expiration, call value equals the intrinsic value only (time value = 0)
• The formula is simply: Stock Price = Strike Price + Call Value (when call is in-the-money)
• Option C ($717.60) is correct