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Suppose XYZ Is Priced at €125 a Share, Has a Call

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Essay

Suppose XYZ is priced at €125 a share, has a call with an exercise price of €150, and has two months to expiration costs €0.125 per contract.Why do you suppose investors would be willing to purchase a call that is so far out of the money?


Definitions:

Electrodes

Conductive materials that allow electricity to enter or leave an object, substance, or region, commonly used in electrical circuits and medical devices.

Diaphragm

A large, dome-shaped muscle located at the base of the lungs that aids in the breathing process.

Chest

The front surface of the upper part of the human torso, containing the thoracic cavity and protecting the heart and lungs.

Abdominal Cavities

The space within the abdomen that contains the major organs of digestion and excretion, surrounded by the abdominal walls, diaphragm, and pelvic floor.

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