Datacorp Stock Currently Trades at $50

question 71

Multiple Choice

Datacorp stock currently trades at $50. August call options on the stock with a strike price of $55 are priced at $5.75. October call options with a strike price of $55 are priced at $6.25. Calculate the value of the time premium between the August and October options.

• A) -$0.50
• B) $0
• C) $0.50
• D) $5
• E) -$5

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Definitions:

Auditory Nerve

The nerve that carries signals from the inner ear to the brain, enabling hearing.

Cardiotonic

A type of medication or substance that increases the strength and efficiency of the heart muscle, improving its contraction.

Analgesic

A type of medication used to relieve pain without causing unconsciousness, ranging from over-the-counter aspirin to prescription drugs.

Diuretic

A substance that increases the production of urine, aiding in the removal of excess fluid from the body.