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Braddock Construction Co.'s stock is trading at $20 a share. Call options that expire in three months with a strike price of $20 sell for

Braddock Construction Co.'s stock is trading at $20 a share. Call options that expire in three months with a strike price of $20 sell for $1.50. Which of the following will occur if the stock price decreases 10%, to $18 a share?

Answers:

a.

The price of the call option will increase by less than $2, but the percentage increase in price will be more than 10%.

b.

The price of the call option will increase by more than $2.

c.

The price of the call option will decrease by $2.

d.

The price of the call option will decrease by less than $2, and the percentage decrease in price will be more than 10%.

e.

The price of the call option will increase by more than $2, but the percentage increase in price will be less than 10%.

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