PRMIA Exam 8009 Topic 1 Question 5 Discussion

Actual exam question for PRMIA's 8009 exam

Question #: 5
Topic #: 1

PwC concluded that the accounting policy adopted by China Aviation Oil was incorrect because it

Aonly regarded the intrinsic value (i.e. the difference between the strike price and the forward price of the underlying commodity) as the fair value of its options

Btook into account both the intrinsic value and the time value

Conly took into account the time value of the option (which includes recognizing the time left to maturity of the option, the volatility of the spot price of the underlying commodity, interest rates and other factors)

Dused neither the intrinsic value nor the time value

Show Suggested Answer

Suggested Answer: A

by Viva at May 05, 2022, 06:40 PM

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