The Common Stock of New Horizon Homes Is Selling for $68.70

question 17

Multiple Choice

The common stock of New Horizon Homes is selling for $68.70 a share. U.S. Treasury bills are currently yielding 4.65 percent. What is the current value of a one-year call option on this stock if the exercise price is $67.50 and you assume the option will finish in the money?

• A) $0
• B) $1.20
• C) $3.00
• D) $4.20
• E) $5.40

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