If a Microsoft January 20 Put Option with a Strike

question 88

Multiple Choice

If a Microsoft January 20 put option with a strike price of $20 was selling for $5.00 and the market price of the underlying Microsoft stock was $18.00, the price of the put option would be _______________.

• A) in-the-money
• B) out-of-the-money
• C) fairly priced
• D) flat priced

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Definitions:

Salary Increase

An upward adjustment to an employee's base compensation.

Nonlabor Income

Income received that does not originate from employment or wages, such as dividends, interest, and rental income.

Wage Rate

The amount of money paid to an employee per unit of time, often hourly or annually.

Utility Function

A representation in economics that shows the relationship between consumption bundles and the level of satisfaction or utility they provide to an individual.