A Put Option on a Stock Is Said to Be

question 105

Multiple Choice

A put option on a stock is said to be in the money if

• A) the exercise price is higher than the stock price.
• B) the exercise price is less than the stock price.
• C) the exercise price is equal to the stock price.
• D) the price of the put is higher than the price of the call.
• E) the price of the call is higher than the price of the put.

---

Definitions:

Budget Constraint

A representation of all the combinations of goods and services that a consumer can afford to buy at given prices within their income level.

Apples

A type of fruit that is cultivated worldwide and comes in various colors, including red, green, and yellow, known for its crisp texture and sweet to tart flavor.

Bananas

A common fruit known for its elongated shape and soft, starchy interior, often consumed as a snack or used in cooking.

Utility Function

A mathematical representation of how a consumer ranks different bundles of goods according to the levels of satisfaction they provide.