You Own One Call Option with an Exercise Price of $30

question 167

Multiple Choice

You own one call option with an exercise price of $30 on Nadia Interiors stock. This stock is currently selling for $27.80 a share but is expected to increase to either $28 or $34 a share over the next year. The risk-free rate of return is 5 percent and the inflation rate is 3 percent. What is the current value of your option if it expires in one year?

• A) $.76
• B) $.79
• C) $.89
• D) $.92
• E) $.95

Describe the impact of scarcity and martyrdom effect on consumer psychology.

Identify the components of the communications model and the role of feedback in effective communication.

Recognize the importance of message customization and the role of media in marketing communications.

Explain the principles of authority, reciprocity, and source credibility in persuasion.

---

Definitions:

Strict Liability

A legal doctrine that holds a party responsible for damages or harm caused by their actions, without the need to prove negligence or fault.

Strict Product Liability

Liability under which, courts may hold the manufacturer, distributor, or retailer liable for any reasonably foreseeable injured party.

Negligence Per Se

A legal doctrine where an act is considered negligent because it violates a statute or regulation.

Breach of Warranty

The failure to fulfill the terms of a promise or claim made regarding the quality or nature of a product or service.