The Common Stock of Mercury Motors Is Selling for $43

question 426

Multiple Choice

The common stock of Mercury Motors is selling for $43.90 a share. Treasury bills are currently yielding 4.5 percent. What is the current value of a one-year call option on Mercury Motors stock if
The exercise price is $37.50 and you assume the option will finish in the money?

• A) $6.12
• B) $6.40
• C) $6.69
• D) $7.67
• E) $8.01

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