A stock currently sells for $75 per share. A call option on the stock with an exercise price of $70 currently sells for $5.50. The call option is
A) at-the-money.
B) in-the-money.
C) out-of-the-money.
D) at breakeven.
E) above-the-money.

Question

Quizplus · Accepted Answer

The call option is in-the-money because the exercise price ($70) is lower than the current stock price ($75). Investors who exercise the call option will be able to buy shares at a lower price than the current market price, allowing them to make a profit.

A Stock Currently Sells for $75 Per Share