Deeble Construction Co.’s stock is trading at $30 a share. There are also call o
ID: 2757494 • Letter: D
Question
Deeble Construction Co.’s stock is trading at $30 a share. There are also call options on the company’s stock, some with an exercise price of $25 and some with an exercise price of $35. All options expire in three months. Which of the following best describes the value of these options?
The options with the $35 exercise price have an exercise value greater than $0.
The options with the $25 exercise price will sell for $5.
The options with the $25 exercise price have an exercise value equal to $5.
The options with the $25 exercise price will sell for less than the options with the $35 exercise price.
a.The options with the $35 exercise price have an exercise value greater than $0.
b.The options with the $25 exercise price will sell for $5.
c.The options with the $25 exercise price have an exercise value equal to $5.
d.The options with the $25 exercise price will sell for less than the options with the $35 exercise price.
Explanation / Answer
The options with the $25 exercise price have an exercise value equal to $5.
c.The options with the $25 exercise price have an exercise value equal to $5.
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