John and Randy form a company with assets worth $900. They each have four shares of stock. Randy gives Cheri a call option on one share of stock. The option has an exercise price of $100 and
Expires in one year. In one year, the ﬁrm's assets are worth $1,000 and Cheri exercises the option.
What is the intrinsic value of the option at maturity?
A) $0
B) $25
C) $50
D) $150
E) $200

Question

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The Answer of John and Randy form a company with assets worth $900. They each have four shares of stock. Randy gives Cheri a call option on one share of stock. The option has an exercise price of $100 and
Expires in one year. In one year, the ﬁrm's assets are worth $1,000 and Cheri exercises the option.
What is the intrinsic value of the option at maturity?
A) $0
B) $25
C) $50
D) $150
E) $200

John and Randy Form a Company with Assets Worth $900