Question
DMaterial's stock is trading at $50 a share. Call options on the company's stock are also available, some with a strike price of $45 and
DMaterial's stock is trading at $50 a share. Call options on the company's stock are also available, some with a strike price of $45 and some with a strike price of $55. Both options expire in three months. Which of the following best describes the value of these options? a. The options with the $45 strike price will sell for less than the options with the $55 strike price. b. If DMaterial stock price rose by $7.50, the exercise value of the options with the $45 strike price would also increase by $7.50. c. The options with the $55 strike price have an exercise value greater than $0. d. The options with the $45 strike price have an exercise value greater than $5. e. The options with the $45 strike price will sell for $5.
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