Suppose That Nielson Motors Stock Is Trading for $50 Per

question 17

Multiple Choice

Suppose that Nielson Motors stock is trading for $50 per share and that Nielson pays no dividends.What is the maximum possible price for a call option on Nielson Motors?

• A)$0
• B)$20
• C)$50
• D)infinite

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Definitions:

Quitclaim Deed

A deed that transfers to the buyer only the interest that the seller may have in a property and that contains no warranties.

Warranties of Title

Legal guarantees provided by a seller to a buyer that the seller has the right to sell the property and that the property is free from any lien or encumbrance.

Subterranean Rights

Refers to the rights to use and exploit underground resources such as minerals, oil, and natural gas located beneath a property.

Fructus Industrials

Crops that are planted and harvested by human labor, such as wheat or corn.