The current market price of a share of BCE stock is $50.If a call option on this stock has a strike price of $45,the call
A) is out of the money.
B) is in the money.
C) sells for a higher price than if the market price of BCE stock is $40.
D) a and c.
E) b and c.

Question

Quizplus · Accepted Answer

A call option is "in the money" when the market price of the stock is above the strike price. Since the market price ($50) is above the strike price ($45), the call is in the money. Additionally, the call option would sell for a higher price than if the market price were $40, as the intrinsic value and potential for profit are greater.

The Current Market Price of a Share of BCE Stock