Suppose the Price of a Share of Google Stock Is

question 10

Multiple Choice

Suppose the price of a share of Google stock is $500. An April call option on Google stock has a premium of $5 and an exercise price of $500. Ignoring commissions, the holder of the call option will earn a profit if the price of the share

• A) increases to $504.
• B) decreases to $490.
• C) increases to $506.
• D) decreases to $496.
• E) None of the options are correct.

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Definitions:

Personal Property

Movable assets owned by an individual or entity, as opposed to real property like land or buildings.

Real Property

Legal term describing land and anything permanently attached to it, such as buildings.

Mortgagee

The lender in a mortgage loan agreement, typically a bank or financial institution.

Deficiency Judgment

A court order that holds a borrower personally liable for the shortfall when the sale of a foreclosed property does not cover the outstanding loan balance.