Which one of the following situations will produce the highest call price, all else constant?
A)$29 stock price; $30 strike price
B)$41 stock price; $40 strike price
C)$20 stock price; $20 strike price
D)$34 stock price; $35 strike price
E)$24 stock price; $25 strike price

Question

Quizplus · Accepted Answer

The call price increases as the difference between the stock price and the strike price increases, assuming all else is constant. Among the given options, option B ($41 stock price; $40 strike price) has the highest positive difference, indicating the highest intrinsic value and thus the highest call price.

Which One of the Following Situations Will Produce the Highest