A Stock Has a Spot Price of $55

question 13

Multiple Choice

A stock has a spot price of $55. Its May options are about to expire. One of its puts is worth $5 and one of its calls is worth $10. The exercise price of the put must be ________ and the exercise price of the call must be ________.

• A)$50; $45
• B)$55; $55
• C)$60; $45
• D)$60; $50
• E)One cannot tell from the information given.

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Definitions:

Current Ratio

A financial ratio indicating a firm's capability to meet its short-term liabilities using its available assets.

Short Term Liabilities

Financial obligations that are due within one year or within the normal operating cycle of the business.

Short Term Assets

Assets expected to be converted into cash or used within one year or one business cycle, whichever is longer.

Balance Sheet Columns

The sections in a balance sheet that typically include assets, liabilities, and shareholders' equity.