You know that a call will finish in-the-money.Based on that single piece of information,you also know which one of the following?
A) The stock price will equal the strike price at expiration.
B) The risk-free rate is zero percent.
C) A put on the same underlying asset with the same strike and expiration will finish out-of-the-money.
D) The strike price will exceed the stock price at expiration.
E) The price of the call is equal to the price of the put.

Question

Quizplus · Accepted Answer

If a call option will finish in-the-money, then the underlying asset's price must have gone up, making a put option with the same strike and expiration out-of-the-money. Option A cannot be inferred as the question does not provide any information on the relationship between the stock price and the strike price. Option B is unrelated to the given information about the call option. Option D is inconsistent with the given information that the call option will finish in-the-money. Option E is also unrelated to the given information about the call option.

You Know That a Call Will Finish In-The-Money