Which combination of stock, exercise, and option prices are most likely associated with an American call option?
A) stock = $60, exercise = $65, option = $5
B) stock = $65, exercise = $60, option = $5
C) stock = $65, exercise = $60, option = $7
D) stock = $60, exercise = $65, option = $7

Question

Quizplus · Accepted Answer

The stock price is higher than the exercise price, and the option price is higher than the intrinsic value (stock price - exercise price). This is most likely associated with an American call option, which gives the holder the right to exercise the option at any time before expiration.

Which Combination of Stock, Exercise, and Option Prices Are Most