The Current Market Price of a Share of CSCO Stock

question 53

Multiple Choice

The current market price of a share of CSCO stock is $22. If a call option on this stock has a strike price of $20, the call

• A) is out of the money.
• B) is at the money.
• C) sells for a higher price than if the market price of CSCO stock is $21.
• D) is out of the money and sells for a higher price than if the market price of CSCO stock is $21.
• E) is in the money and sells for a higher price than if the market price of CSCO stock is $21.

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Definitions:

No Gain

Refers to a situation in financial or business transactions where there is no profit or increase in value.

Gain on Disposal

is the financial profit made from the sale of an asset, which exceeds its carrying amount.

Insurance Cheque

A payment issued by an insurance company to cover losses or claims.