Deeble Construction Co.'s stock is trading at $30 a share.Call options on the company's stock are also available, some with a strike price of $25 and some with a strike price of $35.Both options expire in three months.Which of the following best describes the value of these options?
A)The options with the $25 strike price will sell for $5.
B)The options with the $25 strike price will sell for less than the options with the $35 strike price.
C)The options with the $25 strike price have an exercise value greater than $5.
D)The options with the $35 strike price have an exercise value greater than $0.
E)If Deeble's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.

Question

Quizplus · Accepted Answer

The Answer of Deeble Construction Co.'s stock is trading at $30 a share.Call options on the company's stock are also available, some with a strike price of $25 and some with a strike price of $35.Both options expire in three months.Which of the following best describes the value of these options?
A)The options with the $25 strike price will sell for $5.
B)The options with the $25 strike price will sell for less than the options with the $35 strike price.
C)The options with the $25 strike price have an exercise value greater than $5.
D)The options with the $35 strike price have an exercise value greater than $0.
E)If Deeble's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.