Deeble Construction Co

question 1

Multiple Choice

Deeble Construction Co.'s stock is trading at $30 a share. Call options on the company's stock are also available, some with a strike price of $25 and some with a strike price of $35. Both options expire in 3 months. Which of the following best describes the value of these options?

• A) The options with the $25 strike price will sell for less than the options with the $35 strike price.
• B) The options with the $25 strike price have an exercise value greater than $5.
• C) The options with the $35 strike price have an exercise value greater than $0.
• D) If Deeble='s stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.

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Definitions:

Practical Intelligence

Practical intelligence refers to the ability to solve everyday problems by utilizing knowledge gained from experience rather than purely theoretical or technical understanding.

Reasoning Skills

The capacity to think logically, form sound judgments, and solve problems efficiently.

Subtheories

Smaller, component theories that support and enhance understanding within a larger theoretical framework.

Triarchic Theory

A theory of intelligence proposed by psychologist Robert Sternberg, stating intelligence consists of analytical, creative, and practical abilities.