A Stock Currently Sells for $15 Per Share

question 56

Multiple Choice

A stock currently sells for $15 per share.A put option on the stock with an exercise price $20 currently sells for $6.50.The put option is

• A) At-the-money.
• B) In-the-money.
• C) Out-of-the-money.
• D) At breakeven.
• E) None of the above.

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Definitions:

Primacy Effect

The tendency to remember information at the beginning of a list better than information in the middle or end.

Horn Effect

A cognitive bias causing negative traits or experiences with an individual to influence overall perception of them disproportionally.

Recency Effect

is the cognitive phenomenon where the most recently presented items or experiences are more likely to be remembered than those presented earlier.