Cazden Motors' Stock Is Trading at $30 a Share

question 23

Multiple Choice

Cazden Motors' stock is trading at $30 a share.Call options on the company's stock are also available, some with a strike price of $25 and some with a strike price of $35.Both options expire in three months.Which of the following best describes the value of these options?

• A) The options with the $25 strike price will sell for less than the options with the $35 strike price.
• B) The options with the $25 strike price have an exercise value greater than $5.
• C) The options with the $35 strike price have an exercise value greater than $0.
• D) If Cazden's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.
• E) The options with the $25 strike price will sell for $5.

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Definitions:

Product Differentiation

The method of making a product or service stand out from competitors in the marketplace to appeal more effectively to a specific target audience.

Disaggregating Inventories

The process of breaking down inventory into detailed categories or segments to better manage and control stock.

Continuous Review

A perpetual inventory tracking system where the inventory level of an item is constantly monitored, and orders are placed as soon as it drops below a predetermined level.

Lead Time

The total time taken from the initiation to the completion of a production process, including the time required for ordering materials and manufacturing.