Which One of the Following Is Correct for the Owner

question 47

Multiple Choice

Which one of the following is correct for the owner of a June call on XYZ Corp.with an exercise price of $60? XYZ Corp.currently trades at $55 and the option at $3.

• A) XYZ stock will go to $63 per share within the option period.
• B) The option should be exercised now.
• C) The option owner's current profit is $3 per share.
• D) The option may expire without value.

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Definitions:

System II Thinking

A cognitive process that is slower, more deliberative, and more logical than instinctive and quick System I thinking.

Unwarranted Assumptions

Beliefs or premises accepted without sufficient evidence or justification, often leading to flawed conclusions.

Restructuring

A cognitive process in problem-solving and learning that involves changing the problem's representation or the solution's approach.

Mastership

The possession or demonstration of masterly skill or great proficiency.