1. Steve owns an option that grants him the right to purchase shares of LK Tool stock at $45 a share. Currently, the stock is selling for $52.40 a share. Steve would like to realize his profits but is not permitted to exercise the option for another two weeks. Which one of the following does Steve own?

A) Straight bond

B) American call

C) American put

D) European call

E) European put

1. The primary difference between an American call option and a European call option is the fact that the American call:

A) has a fixed strike price while the European strike price varies over time.

B) is a right to buy while a European call is an obligation to buy.

C) has an expiration date while the European call does not.

D) is written on 100 shares of the underlying security while the European call covers 10 shares.

E) can be exercised at any time prior to expiration while the European call can only be exercised on the expiration date.

. Which one of the following describes the intrinsic value of a put option?

A) Lesser of the strike price or the stock price

B) Lesser of the stock price minus the exercise price or zero

C) Lesser of the stock price or zero

D) Greater of the strike price minus the stock price or zero

E) Greater of the stock price minus the exercise price or zero