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    Call Option on Deeb Construction Co.'s stock

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    Deeb Construction Co.'s stock is trading at $30 a share. There are also call options of the company's stock. Some with an exercise price of $25 and some with an exercise price of $35. All options expire in three months. Which of the following best describes the value of these options?

    a. The option with $25 exercise price will sell for $5
    b. The option with $25 exercise price will sell for less than the option with the $35 exercise price
    c. the option with the $25 exercise price have an exercise value greater than $5
    d. The option with the $35 exercise price have an exercise value greater than $0
    e. If Deeble's stock price rose by $5, the exercise value of the options with the $25 exercise price would also increase by $5

    Please provide detailed solution

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    Solution Preview

    Deeb Construction Co.'s stock is trading at $30 a share. There are also call options of the company's stock. Some with an exercise price of $25 and some with an exercise price of $35. All options expire in three months. Which of the following best describes the value f these options?

    a. The option with $25 exercise price will sell for $5
    b. The option with $25 exercise price will sell for less than the option with the $35 exercise price
    c. the option with the $25 exercise price have an exercise value greater than $5
    d. The option ...

    Solution Summary

    Answer and explanation to a multiple choice question on Call Option

    $2.49

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