If a Microsoft January 20 Call Option with a Strike

question 17

Multiple Choice

If a Microsoft January 20 call option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $25.62, the price of the call option would have to be __________ to eliminate arbitrage opportunities.

• A) $0.62
• B) $5.62
• C) $15.62
• D) $25.62

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Definitions:

Damages

Financial compensation that a person or organization is ordered to pay to another as restitution for harm or injury suffered.

Delaware

A U.S. state located on the Atlantic Coast in the mid-Atlantic region, known for its business-friendly corporation laws.

Publicly Traded Corporations

Companies whose shares are traded on public stock exchanges, allowing them to be bought by and sold to the general public.

Self-dealing

A situation in which an individual with fiduciary duties acts in their own best interest rather than in the interest of the beneficiaries, potentially leading to a conflict of interest.