IBM Shares Are Currently Selling at $75

question 58

Multiple Choice

IBM shares are currently selling at $75. The premium on a call option on IBM shares with an exercise price of $60 will be:

• A) less than $15.
• B) greater than $15.
• C) equal to $15.
• D)zero.

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Definitions:

Alternative Hypothesis

A hypothesis that is adopted when there is sufficient evidence to reject the null hypothesis, often denoted H1.

Population Proportion

The ratio or fraction of members in a population that have a particular characteristic, often denoted by P.

Sample Proportion

The fraction of the sample that displays a certain property or characteristic.

Null Hypothesis

The null hypothesis is a statement used in statistical testing that proposes there is no significant difference or effect, serving as the default assumption to be tested against.