Suppose that Nielson Motors stock is trading for $50 per share and that Nielson pays no dividends.What is the maximum possible price for a call option on Nielson Motors?
A)$0
B)$20
C)$50
D)infinite

Question

Quizplus · Accepted Answer

Since Nielson Motors pays no dividends, the maximum possible price for a call option on its stock is infinite. This is because there is no upper limit on how much the stock price can increase, and therefore no upper limit on the potential profit from owning a call option.

Suppose That Nielson Motors Stock Is Trading for $50 Per