Suppose the Price of a Share of ONB Stock Is

question 86

Multiple Choice

Suppose the price of a share of ONB stock is $200. An April call option on ONB stock has a premium of $5 and an exercise price of $200. Ignoring commissions, the holder of the call option will earn a profit if the price of the share

• A) increases to $204.
• B) decreases to $190.
• C) increases to $206.
• D) decreases to $196.
• E) None of the options are correct.

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Definitions:

Government Intervention

Actions taken by the government to influence economic activity and market outcomes, such as regulation, subsidies, and taxation.

Monetarists

Economists who believe that the variations in the money supply have major influences on national output in the short run and the price level over longer periods.

Money Supply

The total monetary resources accessible in an economy, including but not limited to cash, coins, and the balances held in checking and savings accounts, at a particular moment.

Reason and Good Sense

The ability to think about things logically and make judgments that are based on reason rather than emotion.