A Stock Is Selling for $31

question 19

Multiple Choice

A stock is selling for $31. There is a call option on the stock with an exercise price of $27. What is the approximate minimum value of the call option?

• A) $0
• B) $4
• C) $27
• D) $31

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Definitions:

Capacity Decision

Choices made by a company regarding the amount of resources it will commit to meet demand for its products or services.

Organization's Strategy

The comprehensive plan created by a business or organization to achieve its long-term goals and successfully operate in the competitive environment.

Effective Capacity

The maximum output level a facility can reasonably sustain under normal operating conditions.

Actual Output

The real quantity of goods or services produced by a company or a production process, as opposed to planned or theoretical output.